A Guide to Reverse Mortgages
If you are a senior and own your home, you might be eligible for a reverse mortgage. A reverse mortgage allows you to borrow against the equity you hold in your home and enjoy the money as you see fit. The only requirements are that you must be at least 62 years of age as well as own a substantial amount of equity in the home that you live in. When you pass away, your home will be sold by your estate to pay the reverse mortgage back in full. In some cases there will be money left over, and sometimes not, however this is a great way to ensure that you get all that you can out of your home without leaving your estate or heirs, in any kind of debt.
With a reverse mortgage you do not need to make monthly payments like you do with a traditional mortgage, instead the lender pays you. Reverse mortgages operate in the opposite fashion, offering a borrower money up to the balance of the equity they have in their home. Therefore, there is no risk of losing your home due to missing a payment. This is a benefit many seniors appreciate, especially those that don’t have a source of income to draw from.
Reverse mortgages are also commonly referred to as “rising debt, falling equity” loans or simply “rising debt loans” because instead of paying down a loan balance and increasing your home’s equity, equity is decreasing as a result of increasing debt. Also, keep in mind that a reverse mortgage will become due in full if you move. So if you want funds for a down payment on a new home or even just cash to spend after you move, it would be wise not borrow the full amount of your home’s equity.
If you like the idea of being able to spend your time and money as you choose during your golden years, a reverse mortgage might be the perfect way to go.
