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The typical reverse loan must have some magic benefits, because seniors take them with a growing speed. From 2007 107,558 taken loans to 2009, when the figure is almost four times bigger. Is the reason for the growing popularity, that seniors have more experiences from the reverse loan and they spread the word to each other. Or have the attitudes changed, I mean the right to use the home equity for the daily expenses? Funny thing is, that according to the research, almost all seniors are very happy with the reverse loan. 1. A Senior Can Pay Away The Old Mortgage. Because retired people usually cannot increase their monthly income, the only way to get more cash is to sell something or to take a reverse loan. If they will end up to the reverse loan, they will get double benefits. Because a senior cannot have both the usual mortgage and the reverse mortgage, he has to pay away the usual mortgage. This will bring even more disposable money to him, because the monthly payments will decrease. 2. The Refinancing. One important factor with the mortgage loan is the interest rate. In the case, that a senior has an old mortgage loan with a high and fixed interest rate, he can pay that loan away and to take a new reverse mortgage loan with either fixed or variable rate, depending which one is lower. This can bring a nice amount of disposable money every month. 3. The Reverse Loan Does Not Change The Home Ownership. Maximum three seniors can be the borrowers, but all must then be the owners of the home. Many seniors think, that the reverse loan changes the ownership of the home, but that is not the case and the borrowers must take care about the property taxes and insurances and to keep the home in a decent condition. 4. A Borrower Can Enjoy About The Home Price Increases In The Future. When we usually speak, that the reverse loan eats the home equity, which is true, we have to mention, that usually the home prices will grow substantially during a long period of time. This iwill increase the home equity. 5. What Happens, If The Lender Becomes Bankrupt? A senior with the reverse loan may be afraid, that he or she will lose the money, if the lending company becomes bankrupt. That is not true, because the borrower has to take an obligatory mortgage insurance. This insurance makes the reverse mortgage the safest mortgage in the market. There is one more benefit for the seniors. The reverse mortgage qualification is easy. Everybody, who owns a home and is 62 or older can get the loan. Of course the property must have equity left, because the loan will be taken against that. But no credit or income information will be asked. Juhani Tontti, B.Sc., Marketing. The system how reverse mortgages work is useful to know. For a senior the reverse mortgage loan can be the only source of extra cash. Visit: reverse loan
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