Advantages Of A Reverse Mortgage In Illinois For Homeowners
This BLOG On Advantages Of A Reverse Mortgage In Illinois For Homeowners Was UPDATED On November 25th, 2018
Reverse mortgages were created to assist homeowner seniors who are at least 62 years old. Homeowners needs equity in their homes where they can get cash out without income and credit scores verification.
- Reverse mortgages are powerful financial tools that should be used by the right people for the right reasons
- They offer amazing advantages but do have some trade-offs
- One must compare the Advantages Of A Reverse Mortgage versus the negative factors this popular loan program has
In this article, we will cover and discuss the mortgage guidelines on reverse mortgages.
Reverse Mortgage Advantages
Advantages Of A Reverse Mortgage for homeowners in Chicago, Illinois and the rest of the state of Illinois are the following:
Qualifying For Chicago Reverse Mortgage Borrowers Streamlined:
- Because reverse mortgage borrowers will no longer have to make monthly mortgage payments, the borrower’s credit scores or credit will not become a factor when qualifying
Most mortgage programs have a borrower’s credit scores as one of the most important determining factors on what mortgage interest rates they get:
- Not with reverse mortgages.
- Any cash-out from reverse mortgages are tax-free and borrowers do not have to pay any taxes
- Whatever equity a borrower has on their home is still theirs
- Many think that just because they are doing a cash-out reverse mortgage that they do not have ownership to the home
- Homeowners can sell their homes at any time and pay off their reverse mortgages
Equity Of Home Passes To Homeowners Heirs
Homeowners who intend on staying in their homes for the rest of their lives, the equity passes down to their heirs.
- Heirs can decide to pay off the loan balance and keep the property in lieu of selling their homes
- Seniors who have equity in their homes but little income and are facing foreclosure, they can use a reverse mortgage to save their homes
- Not worry about making another mortgage payment again
Borrowers cannot outlive the loan:
- Borrowers who have balances exceeding the property market value, their heirs will not be responsible for the difference
Reverse Mortgage proceeds can be used for many purposes:
- Any proceeds from reverse mortgages can be used for anything the homeowners deems fit
- Whether it is for repairs, paying down debts, vacation, or buying a second home or other investments, it is up to the borrower to use the proceeds
Advantages Of A Reverse Mortgage Versus Tradeoffs
What Are The Occupancy Requirements:
- Only owner-occupied homeowners qualify
Borrowers cannot plan on renting out the property and use it as a rental and purchase another property.
One spouse could face eviction:
- Surviving non-borrowing spouses can face eviction when their spouse is no longer living
- That’s because once the spouse who took out the loan dies, the reverse mortgage becomes due
This typically happens when one spouse is significantly younger than the other –
- because age is part of the formula that determines how much you can borrow, taking the younger spouse off the home’s title increases the reverse mortgage proceeds
- However, when the older spouse dies, the loan must be repaid
- If the younger spouse can’t pay it, the house is sold
Homeowners Responsible For Maintenance And Property Taxes/Insurance
Homeowner Responsible For Maintaining The Property As Well As Property Taxes And Homeowners Insurance:
Reverse mortgages can be an expensive way to borrow:
- Reverse mortgages are not the answer if you need a few thousand to repair a porch (unless your income is low enough to make you eligible for a special-purpose loan)
While fees for HECMs are limited by the federal government, the required mortgage insurance isn’t cheap–home equity loans are much less expensive for those who qualify. This disadvantage has been somewhat offset by the creation of the HECM Saver program, which allows people to borrow lower amounts at a substantially lower cost.
You can lose eligibility for Medicaid or Supplemental Security:
- If you take your reverse mortgage proceeds as a lump sum and don’t spend it immediately, you could lose eligibility for needs-based programs
- In most cases, a single person is only allowed to have $2,000 in cash to be eligible for Medicaid
You can see that some of these pros and cons can be difficult to navigate. For this reason, advocates like Consumers Union recommend that you get reverse mortgage counseling, shop carefully for the best reverse mortgage deal, and avoid signing anything that you don’t understand. For more information, check out the article Understanding Reverse Mortgage Disclosures on these pages and get pre-approved for a reverse mortgage, APPLY NOW FOR A REVERSE MORTGAGE or contact us at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org. We are available 7 days a week including evenings, weekends, holidays.