The Best Loans Available For Senior Citizens
WHAT TYPES OF LOANS ARE AVAILABLE FOR SENIORS?
As people move into the "sunset" of their life, it's important to know that if the need arises, you still have viable options when it comes to borrowing money.
Especially in a bad economy, the future can look very frightening. Huge investment losses or rising debt can make the future look bleak for seniors.
There are ways that you can get money, however, if you need it and here are some of the potential places to obtain loans for seniors.
Let's find the best loans available for senior citizens.
Loan Types Available for Senior Citizens
Subsidized loans don't accrue any interest as long as a student is enrolled at least part-time. It's a loan based on financial need. An unsubsidized Stafford loan is not based on financial need and interest will begin accruing as soon as the loan is given.
There are no age restrictions or even credit checks for either kind of Stafford loan. Both types come with a low fixed interest rate. No matter what your age, you can apply for a Stafford loan with a Free Application for Federal Student Aid form - the FAFSA.
Private loans or loans from alternative sources are also available. These are not federally guaranteed and you
will most often pay higher interest rates than for the Stafford loans. Usually you also have to start paying them back upon issuance from the lender.
These have become very popular though they have also generated a lot of argument pro and con. Reverse mortgaging means that you are basically flipping your mortgage payment by tapping into the equity of the home. The equity in the home is actually being paid back to the owner and is generally done in monthly payments though can be paid back in a lump sum or once a year, etc.
Reasons to use reverse mortgages:
- Paying off an existing mortgage
- Supplementing retirement income
- Needing money for home improvements
- Paying bills
- Healthcare expenses
The kinds of reverse mortgages also vary. Something called a single purpose reverse mortgage is available from government agencies both at the state and local level. Some are also available from nonprofit organizations. This kind of reverse mortgage varies from state to state and in fact and some states don't even have them.
There are also reverse mortgages guaranteed by the Department of Housing and Urban Development called Home Equity Conversion Mortgages (HECMs).
Lastly, there are private reverse mortgage loans called proprietary reverse mortgages.
Reasons people are applying for reverse mortgages are usually varied but most commonly, it's a way for a homeowner to live in their house and not have to pay their mortgage for as long as they live in the home. Most often, money that goes back to the homeowner as payment is not taxable.
Criticism of reverse mortgages has centered around the high costs in terms of securing the loan or closing costs. Also the fact that the longer a senior has the home on one of these mortgages, the more the home equity is depleted.
But, in contrast, the
senior with a reverse mortgage can never owe more than the home is worth
they cannot pass on any debt from the reverse mortgage to their heirs.
(One of the reasons that these are not popular is because children or
heirs get a little ticked that nothing will be left for them - I say
enjoy it while you're here and forget about the heirs!)
These are short term loans that are not secured and most often are made on
a current day basis. Some seniors use
payday loans when they find themselves short on cash or in between retirement
checks. They generally have large fees
associated with them and you're paying for the convenience of ready cash. We always pay for convenience!
HOME IMPROVEMENT LOANS
When the unexpected happens such as a natural disaster or a broken water pipe there are loans available that are secured loans. The agreement is usually that the property itself is the collateral for the loan. There are also home improvement loans available by individual states, counties and cities. Most are deferred low interest loans and cover emergency repair types of situations. However, there are also some loans available for such things as revamping a home for wheelchair access that's suddenly needed.
About the Risks of Reverse Mortgages
Finding the Best Loans Available for Senior Citizens
As you can see, there are several options available to the senior community in terms of loans.
If you find that you are in need of a short term or a long term loan, check out some of these ideas but no matter what loan you're applying for, make sure you negotiate for the lowest monthly payment and the lowest interest rate with the least amount of penalties for borrowing should something arise where you can't pay it back on time.
Also don't be afraid to shop around for a better interest rate. Even if you find one, you can always approach your current lender with the lower rate and surprisingly, they'll usually match it!
In the economic climate we are faced with today, lenders are more willing
to offer more options so that people can qualify for loans so if one
institution doesn't meet your criteria, keep shopping for the right loan.
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