Reverse mortgage is meant mainly for the seniors. This senior reverse mortgage requires that the applicant should be 62 years or more and should own a house, which may be used as a collateral. The proceeds of reverse mortgage is used for various purposes.
Features of senior reverse mortgage:
The loan amount may be used for paying ones medical bills, for paying taxes, for repairing house, for funding education of a family member or any other purpose. The loan money is not considered as income and hence is not subjected to income tax. The senior reverse mortgage need not be paid back every month unlike the other traditional mortgage loans.
In the event of death of the seniors (applicants as well as co applicants), the loan amount may be paid back by the heir/successors. The house, which has been mortgaged, may be sold to pay off the mortgage amount.
National Council on the Aging:
Certain facts about senior reverse mortgage have been scripted below.
The NCOA or National Council on the Aging reveals that reverse mortgage has the potentiality of addressing majority of the problems faced by seniors after retirement. It has in fact supported many a different retired households.
Reports state that there are as many as 27.5 million aged households in the United States. Of these, approximately 15 million households qualify for reverse mortgage products. Out of this 13.2 million retired households depend on reverse mortgage proceeds for LTC or Long Term Care facilities.
As of 2004, approximately $1.9 trillion was accumulated as home equity. It was also found that during February 2004, home equity worth $953 billion could be tapped by extending reverse mortgage schemes to retired households. This amounted to $72,128 for every household.
The main reason why NCOA conducted the survey was to facilitate the usage of Long Term Care Programs in reverse mortgage. The survey was conducted under the “NCOA 's National Blueprint”. Thereafter, recommendations pertaining to demonstration programs, administrative measures, consumer protection as well as regulatory alterations were introduced.