Finance 101: Reverse Mortgage Loans Perfect for COVID-19 Aid?
The effects of the Coronavirus, more commonly referred to as COVID-19, the global economy has suffered greatly, pushing many individuals to lose sources of income. Despite the increasingly terrifying situation we’re in, a lack of funds can just be as terrifying—as this will make things so much more difficult.
Despite the number of government-funded aid programs going around, the toll on senior citizens is even worse. As desperate as the situation sounds, there is still a solution for senior citizen homeowners to have quick access to cash. All they’ll need to do is file for a reverse mortgage.
The Reverse Mortgage
A reverse mortgage is a loan offered to senior citizens of at least 62 years of age. Through this method, they are able to secure a non-recourse loan of which the value is borrowed against the property they own. This method is perfect for senior citizens with no easy access to cash but has a considerable amount of home equity.
On a general basis, many would discourage an individual from securing a reverse mortgage due to the increasingly expensive cost for paying it off, as well as the complex process needed in order to secure one. As true as that may be, the extraordinary situation with COVID-19 has created a bigger need to have cash-on-hand.
To further cement this point, here are two reasons that a reverse mortgage is beneficial amidst this growing pandemic.
Provides quick access to a considerable amount of cash
The most immediate benefit of a reverse mortgage is that a senior citizen will be able to have access to a large amount of cash immediately. This is particularly helpful for the elderly who have amassed huge wealth and poured it into their house—thus allowing them to utilize its worth for an emergency situation such as this.
Although selling the house may prove to be a more profitable set-up, this could end up with a senior citizen without a place to live-in—ultimately harming them in the long run. Through this method, they can borrow money “on the house,” so to speak, just to get them through this tough time.
No monthly dues and payments
Although it is entirely possible to borrow money from a bank or other financier for some needs, the requirement to pay them back immediately is even more devastating during this period. Without easy access to a source of income, paying back in time on a monthly basis can be devastating for a senior citizen.
Through a reverse mortgage, the payment is not expected to come on a regular basis, or even immediately, the senior citizen can have it paid upon their death or at their leisure. This way, they can rest easy without having to think too much about debt—for the meantime at least.
As complex and unadvisable reverse mortgages may seem initially, it is still a good avenue for a senior citizen to pursue if they’re in dire need of money. This can at least take away some of the financial strain that COVID-19 is causing, allowing some flexibility and stability to enter the life of a senior in such troublesome times.
If you’re looking to get a mortgage in Colorado, then apply one with us at Move Mortgage! We provide you with the partnership and advice that you will need to get approved for that loan.