We all know how clearing home loans can sometimes seem like an impossible task and that is why we have reverse mortgages. We are all aware of their usefulness but there are perks that follow them. Here are 8 advantages of a reverse mortgage.
The borrower gets to reside in the house
A reverse mortgage allows you to enjoy several privileges and getting to reside in the house is one of them. While you are paying off the dues, you are allowed to live in the same house without any issues. As long as you are clearing your mortgage on time, nobody can question your residence there.
Liability is not inherited
In case the mortgage borrower dies, the amount will not be passed on to another family member. The responsibility of clearing off the remaining mortgage does not fall upon your family under any conditions. So, you do not have to worry about your family being unable to pay the remainder of the loan if something happens to you.
Clears the existing mortgage
A reverse mortgage serves as a remedy to your existing mortgage. If you have an ongoing loan on your property and are falling short of a small amount of money to clear the house, a reverse mortgage can help you pay off the existing loan and take care of your finances.
The ownership can be inherited
Although the responsibility of clearing off the remaining mortgage does not fall on your family after your death, the ownership of the property can be passed on. Your family can live in the same house as legitimate owners without any hassle.
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Loan amount is limited to the value of the property
A reverse mortgage is usually taken out when you wish to clear off the existing home loan. Therefore, the loan amount is limited to the value of the property only. Therefore, you do not have to pay anything more than the actual value of your residence.
Paying every month is not required
All kinds of traditional loans require you to pay a fixed amount every month in the form of installments. However, a reverse mortgage is different. You are not forced to pay a monthly premium. Instead, you are given the flexibility of paying the amount any time you want, which means you can pay a quarterly or an annual premium rather than a rigid monthly repayment.
Benefit of tax-free income
After you pay off your loan, you are required to pay taxes separately to the government. However, if you apply for a reverse mortgage for your property, the amount that you pay is inclusive of taxes. Therefore, you are not expected to pay any other tax while you are repaying the mortgage.
Interest rates are lower
The interest rates are as low as 2% and go up to 5%. They are extremely affordable for anyone. This is yet another reason why you should consider a reverse mortgage over a personal loan having an 18% interest rate to clear off the remaining house loan.
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