Category "Mortgage"

How Reverse Mortgage Loans Can Help In Credit Card Debts

Many seniors aged 70 and older own credit cards that they can’t pay off the balance in full every month. The best solution to this problem is availing reverse mortgage loans to settle these balances. In a working paper funded by the government and published in September 2016, the researchers say credit card debts suddenly drop when seniors avail the reverse mortgages.

There is also a decrease in debt payment delinquencies and foreclosures once the reverse mortgage is considered. Seniors with bad credit for the first two years of the reverse mortgage are benefited the most. These seniors may have failed to avail another type of home equity loan due to bad credit history, but there are some lenders of reverse mortgage loans who don’t rely on the senior’s credit score.

The study found out that senior borrowers minimized their credit card debt more than those who borrowed other types of home equity loans. The retirees are provided with monthly cash flows to help them pay off their credit card debt.

According to the study, retirees who initially withdrew $10,000 through a reverse mortgage minimized their credit card debt up to $2,400 in the first year after borrowing the money. Additional borrowing proved a smaller additional debt paydowns.

The study is worth noting that it covers borrowers who availed the reverse mortgage loans between 2008 and 2011. This financial history was truly a unique bad period especially with the recession. A similar study performed during such period of economic prosperity may have led to a varied finding.

Seniors who are planning to avail reverse mortgage loans may find solutions to the credit card debt, especially when they have their home equity as an asset to pay off fees and interest of reverse mortgage. They will actually be saved from the financial burdens offered by bad credit card debts. Only an accountant or financial planner can perform this complex calculation. A reverse mortgage lawyer may not be knowledgeable when it comes to this concern. However, they can provide advice to the senior if the reverse mortgage is worth availing to save them from more future problems.

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