For those people who are over 60 years of age and own their own home free and clear a reverse mortgage is one way for you to make use of your home’s equity to get yourself some cash when and if you need it.
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Reverse mortgages for seniors
1. Reverse Mortgages For Seniors
For those people who are over 60 years of age and own their own home free and clear
a reverse mortgage is one way for you to make use of your home’s equity to get
yourself some cash when and if you need it. Basically it’s a loan that uses a part of the
home’s equity as collateral and where you can get the principal amount either as a lump
sum or as revolving line of credit or as a monthly payout for a set number of years.
The title of the home is still with the owner. This means that you can do with it as you
wish – like selling it if you want to. It’s just that the home will simply be encumbered by
the amount of the reverse mortgage.
There is no required monthly payment. In fact it is the lender who will pay you
depending on the payment option you choose as mentioned above. Instead, the interest
and fees, along with the principal amount simply accrues and once the home gets sold
or the owner moves or passes away that’s the time the lender gets paid.
With such a loan you will be able to enjoy a nice retirement free from the worries of
financial instability and be able to live the way you want comfortably. Getting one is
easy since the home’s equity is all that matters.
However, there are downsides to this. It is still a loan. This means the home will be
encumbered by this which can affect the amount of money you will be able to get if you
do plan to sell it. Same is true if you pass away – your heirs will be encumbered by this
should they get the home.
Then there are the fees and interest rates. Do be careful so you don’t get tricked into
higher interests rates and fees that go through the roof. Unfortunately, there are
unscrupulous brokers out there who are in it for the commission so it’s best you be
informed before going for something like this.
Mortgage information comes from Deborah Koval.