Why A Reverse Mortgage is a Savvy Choice

Reserve mortgages are like loan but in reverse. The borrower does not have to make payments to the lender. Instead the bank pays the borrower a certain amount of money. Reserve mortgages help senior citizens who do not have income streams for their survival but have assets, which they can use as collateral for a mortgage.

So if you are a senior citizen and don’t have enough money to fulfill your daily needs, then you should consider taking a reverse mortgage. There are many upsides of taking a reverse mortgage, so if you want to learn more, then stick to this article. In this article, you will get to know about the reasons why a reverse mortgage is a savvy choice.

You Remain The Owner

One of the best upsides of taking a reverse mortgage is that it doesn’t take your homeownership and lets you remain the owner of the house. You can live freely in the home and the lender can’t interfere in your daily lifestyle in any manner. In short, you get full control of your house and you will just pay your taxes, homeowner’s insurance, and maintenance.

Very Flexible

Most loans have strict rules and regulations, but that’s not the case with the reverse mortgage. However, you will have to follow the basic guidelines, but in return you receive amazing flexibility. It doesn’t matter what kind of needs and requirements you have, you can utilize the reverse mortgage as per your convenience. For instance, people who have financial problems can use it to make a steady monthly income source. On the other hand, if you have enough resources, then you can also use it for financial planning.

Low Risk

Another great upside of the reverse mortgage is that it has a lower risk than the home equity loan. With the reverse mortgage, you won’t have to worry about your line of credit being seized. No one can cancel the line of credit if there is too much — or too little — utilization. You won’t have to pay anything until you leave the house. In simple words, unlike the home equity loan, the lender won’t ask you to pay any monthly interest payment.

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No Restrictions

As mentioned above that in a reverse mortgage, you use your property as collateral and get monthly money. Now once you get the money, it totally depends on you how you want to spend the money. The lender won’t interfere with your expenses or where you are spending the money. You can invest it, spend it on travel or medication, or just save it for the future. There are no restrictions.

Variety of Payment Options

With a reverse mortgage, you get different kinds of payment options to choose from. Depending on the type of your loan, you can choose how you want to receive your payments. You can either take them in a lump sum or generate a credit line or a monthly payment for life. You can even take a combination of all options. The line of credit option makes the cash easily accessible and you can use it whenever you need it. Apart from this, it doesn’t matter in what form you take the money, you will have a guaranteed place to live. When you secure a reverse mortgage, you can live in your house as long as you want.

Tax-Free Proceeds

The main thing that makes the reverse mortgage perfect for everyone is that it the proceeds are tax-free. As you know that reverse mortgage is a loan, so you won’t have to pay any tax. Either you take the fixed income or in a lump sum, you won’t be charged tax. This feature is very beneficial as it can be used to solve different problems. As the reserve mortgage is tax-free, it will become easier for you to pay your other bills.

Federally Insured Program

The reverse mortgage is federally insured, which means even if the lender defaults and not able to give you money, you will still get your money from the government. Apart from this, one good thing about a reverse mortgage is that is a non-recourse loan. This means that if the mortgage amount exceeds the value of your home, then you won’t have to pay any extra money. It is federally insured and the government will cover all the additional charges, so you and your family are not liable to pay anything. This means that there are federal protections available to you.

If the value of your house increase in the future, then you can also refinance your reverse mortgage and get more money. Once the loan is repaid, you or your family can take the remaining equity in the home. In case if you are not able to pay the money, then the lender can sell the house to recover the due amount.


The main reason why the reverse mortgage is a good choice is that it gives you amazing flexibility. Along with this, it also lets you stay in the home and you can use the money you have received through reverse mortgage wherever you want. There are no limitations and the best thing is that you remain the owner of your house.

Tyler Plack

About the Author, Tyler Plack

South River Mortgage is one of the nation's top reverse mortgage originators. With a focus on reverse mortgages, South River Mortgage's trustworthy advisors are able to help thousands of seniors each year.

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