Pros And Cons Of A Reverse Mortgage
Reverse mortgages are types of loans where borrowers can take a small portion of their house equity and convert it for a sum that they can borrow. The usual mortgages that we know of involve borrowers having to pay monthly installments in order to clear off their debt. In contrast to this, a reverse mortgage involves lenders paying monthly installments to the borrowers, thereby increasing the debt as time goes by. This loan is typically settled if the borrower decides to sell the house involved in the reverse mortgage and pay the loan back with that money. Let us examine the basics of a reverse mortgage by looking at the pros and cons of it: Pros No obligation on early repayment Unless the borrower decides to sell the house, relocates to another place, or passes away, payments are not needed. You are not obligated to pay the financial institution anything before any of these happens, allowing you to not have to scramble for money during your golden or platinum days. This is one of the major advantages of a reverse mortgage that suits the borrowers. Simple access to money A reverse mortgage is beneficial mostly for senior citizens who do not have a regular source of income.