What You Need to Know if You are Considering a Reverse Mortgage

Reverse mortgages allow people who are aged 62 and above and own their homes to access the equity that is in the home while they are still able to retain ownership of the property. People who receive a reverse mortgage can use this money to pay for whatever they wish, including things like making ends meet, travel, remodeling or home repairs, or even health care related expenses. In order to qualify for a reverse mortgage, the homeowner needs to have quite a bit of equity in the home and they also need to continue paying taxes on the property. Other things that also need to be kept up with include any homeowner’s association fees, and property insurance.

Reverse Mortgages Defined

A reverse mortgage can be defined as a specific sort of loan dependent on the amount of equity that you have in your home. It is only an option for people who are aged 62 and older. Lending with a reverse mortgage allows a homeowner to have access to a part of the equity they have in their home. With a reverse mortgage, interest will be added to the balance of the loan on a monthly basis and the balance will grow. You might also hear of reverse mortgages being referred to as HECMs, or Home Equity Conversion Mortgages.

This type of loan, and it is a loan, does not require the borrower to make payments on the loan. The loan will be repaid once the borrower moves out of the home or dies. People who decide to take out a reverse mortgage can get the funds as a lump sum, a monthly payment, or as a line of credit.   
 

Senior Living

Reverse mortgages can be amazing financial tools for homeowners in their golden years, but there are many things that need to be taken into consideration. One of these is senior living. If you are looking to find a way to pay for moving to a senior facility to avoid loneliness and be able to socially interact more with others of your age, this isn’t it. While you have a reverse mortgage that has not been repaid, you must live in the home. If you move away from the home, the reverse mortgage will have to be paid back. This holds true even if you have to leave the home to go to a nursing home.

Cash Access

In an ideal world, we would all have out away money to take us from retirement right through our golden years. Unfortunately, this doesn’t always happen. One of the reasons to consider a reverse mortgage loan is that it will give you access to cash. Because there are not any sort of monthly payments to be made on this type of loan, the money can be used to pay your debts off. It can eliminate all of your other monthly payments to enhance your lifestyle. It is also something that can give people who don’t happen to be struggling per se, but who still can’t afford to pursue their post – working life dreams, the opportunity to do just that. With this extra money, you might finally be able to do the things that you have always dreamed of doing.

Extend Your Savings

For many people who are over the age of 62, one of the main sources of income will be the Social Security benefits. The thing is, many people tend to go ahead and begin collecting these benefits at the age of 62 as opposed to waiting until they are 65and can collect their full benefits. If you happen to be on a fixed income, putting off getting your Social Security benefits for another 3 years can seem to be impossible. However, if you take out a reverse mortgage, this could give you the freedom that you need, financially speaking, to go ahead and wait those 3 extra years. Additionally, if you have a 401(k), you will need to being paying taxes on that the second you begin drawing it. Having a reverse mortgage can put that off too.

There are many things that need to be considered before you decide to get a reverse mortgage. Take a look at all of your options before you make your decision.