Davie Reverse Mortgage

Davie Reverse MortgageIn recent years reverse mortgages have proven to be useful to older adults who don’t have a source of income or that don’t have a line of credit. All in all reverse mortgages are a helpful financial tool. In this article will cover the pros and cons of getting a Davie reverse mortgage.

Pros of a Davie Reverse Mortgage

Reasons why many senior homeowners should definitely consider taking a reverse mortgage,

Reverse Mortgage Repayments

When a borrower gets a mortgage loan from a lender it is typical that they make monthly mortgage repayments. This means that the borrower has to set aside money every month in order to make the repayments. However, this is not the case with reverse mortgages. With a reverse mortgage, the borrower is not required to make any monthly repayments.

Instead, with a reverse mortgage, the borrower’s repayment is deferred until they; pass away, move out, sell the home, or default on the loan terms.

You need to note though that the borrower is still responsible for paying taxes on the property, home maintenance, or homeowner’s insurance.

Borrower’s remain responsible for paying property taxes as well as home maintenance and home insurance. This is an advantage because the amount that would otherwise have been spent making repayments can be allocated towards other expenses, investments or savings. Click here to see if you would qualify for a reverse mortgage. 

Taxation

One of the most popular features of a reverse mortgage for senior homeowners is that as a borrower, any funds they receive are not tax-deductible. This is because the proceeds are seen as loan proceeds and not income.

This is refreshing especially when you consider that proceeds from retirement investments are taxed.

Live in your home for as long as you wish

So long as you do not default on the terms of the reverse mortgage, you can live in your home for as long as you need to. The terms of the loan require that the borrower meet certain responsibilities in order to avoid the inconvenience of foreclosure.

As long as the borrower meets their end of the bargain, they can live in their home for as long as they want without having to pay a monthly mortgage payment. Borrowers only need to ensure that they are paying property taxes, homeowner’s insurance, and meeting the costs of home maintenance.

Borrower Is Still Owner

The borrower is still the owner of the home even after using it to get a reverse mortgage. The general misconception is that when a borrower receives a reverse mortgage from the lender, the lender now owns their home, but this is not the case. However, in the event that the above mentioned obligations are not met, then the home will definitely go into foreclosure as it would with any type of mortgage.

Home Value

The federal insurance protection ensures that the borrower is protected from making a repayment that is more than the value of the home when it is put on the market. This is even if the home balance surpasses the home’s value. This is a very important feature as it eliminates any concern that the borrower or their heirs will be left with additional debt from the reverse mortgage after the home is sold off.

Non-Recourse

The Home Equity Conversion Mortgage is a non-recourse loan. This means that the HECM is secured by collateral in this case your home. As a non-recourse loan, the borrower is protected from having any of their other assets taken away as repayment for the loan. The borrower’s home is the only asset that the lender can dispose of to recoup their investment. Everything else is off limits.

Government Regulations

Government Regulations with davie reverse mortgageThe HECM is a government product and has been designed with the end consumer in mind; it is designed with the consumer’s best interest in mind and is also well regulated. For instance, all applicants are required to hold a mandatory session with a licensed third party reverse mortgage counselor.

An FHA-approved counselor is familiar with several financial options that might mitigate your current financial situation and they might advise you to consider some of these options before getting yourself a reverse mortgage rate.

However, if you are certain that the Davie reverse mortgage is the best option for you, the FHA-approved counselors will answer any questions you might have. They will also walk you through drawbacks, advantages, loan processes as well as all responsibilities you will have as a borrower.

Pre-payment Penalties

If a borrower chooses to repay a reverse mortgage loan within the term, they will not incur repayment penalties. This is regardless of whether they make full or part payments. Learn more about these penalties by clicking here.

Even though some seniors choose to make monthly repayments on a monthly basis, they do so with the full knowledge that even if the missed making those payments, they would not be in danger of defaulting on their reverse mortgage.