Long Beach, California (PRWEB) November 20, 2014
This article is as much for homebuyers and homeowners 62 years or older as it is for the adult children of aging parents, says Scott Schang, Branch Manager Broadview Mortgage Long Beach.
Reverse mortgages are primarily about providing financial options that include leverage on the home’s equity to help subsidize increasing health costs, or supplementing retirement income to realize a higher quality of life.
“I encourage adult children of aging parents to educate themselves about reverse mortgages as an opportunity to allow, and encourage the parents to consider how a Reverse Mortgage can help allow for a better quality of life as they plan for their future,” says Schang.
Using a Reverse Mortgage could give homeowners the ability to sell their current home, and put a fraction of the proceeds into a new Equity Conversion (Reverse) Mortgage, leaving the remainder of the proceeds as reserves, or to invest in vehicle that increases monthly cash flow with no mortgage payments to be made on their new home.
As an example, let’s say a homeowner is 71 years old and has $300,000 of equity in their current home. For this example, they are also purchasing a home that costs $300,000, says Schang.
The quick and easy answer would be to sell the existing home, and use the proceeds to purchase a new retirement lifestyle, leaving them with only property taxes and homeowner’s insurance to worry about, adds Schang.
With a Reverse Mortgage, owners could put down just over $140,000 toward the purchase of the new home, and still have no payments for as long as they live in the home, again only being responsible for property taxes and homeowner’s insurance, adds Schang.
They accomplish the exact same goal as before, except they are now $160,000 more liquid, which can use to set up college funds for Grandchildren, invest in cash flow vehicles to increase monthly income, or keep as cash reserves for emergencies.
Qualifying for a Reverse Mortgage hinges on two factors, the age of the borrower, and the equity in the home. The income and credit profile are never taken into consideration, says Schang.
This is an often overlooked benefit of using a Reverse Mortgage that prevents many seniors from accessing their retirement equity because they are under the impression that they do not earn enough money to take out a loan, or the credit is not perfect.
There are many myth and misunderstanding about Reverse Mortgages that prevent seniors, and adult children of aging parents from even considering this as an option. For more information on these myths and misunderstandings please visit: http://www.findmywayhome.com/home-mortgage-news/how-to-buy-a-home-using-a-reverse-mortgage/.