Reverse Mortgages are a great retirement tool.
The primary purpose of reverse mortgages is to relieve the aging seniors of financial burdens on them. Reverse mortgages are a financial tool that allows homeowners from age 62 and above to gain access to the money that has accumulated as home equity. Even though there are other financial options, reverse mortgages appear to be more suitable because the potential borrower is not required to make any deposits or have a credit bank balance to be eligible.
How reverse mortgages work is that the lender makes payments to the borrower in contrary to the traditional mortgages. The amount paid out is calculated based on the estimated value or equity remaining in the home (the remaining value of the home after deducting chargeable expenses still owed).
Seniors can use the money to finance their retirement, medical costs, a new car, home repairs, renovations, estate planning, travel, and leisure, etc. To be eligible for reverse mortgages, you do not necessarily need to have paid off your current mortgage entirely. The amount you can have access to will be based on certain factors such as the equity in your home, your age (the older you are, the more funds you are likely to have access to), and cost of existing mortgage (if there is any mortgage). As a prerequisite, all existing mortgages will be settled. In fact, some people use reverse mortgages to get out of their commitment to making monthly mortgage payments and the money they receive will be a bonus.
Reverse Mortagages allow you to keep your home.
When you obtain reverse mortgages, you retain total control of the home, and the property is still in your name. You are responsible for the maintenance of the home and pay all the statutory property taxes and insurance. The lender can by no means take your property from you as long as you make that home your primary residence.
Meanwhile, if all homeowners of the home (as expressed on the title and mortgage) leave the home permanently for any reason, then the loan becomes due and payable. If you will be absent from the home longer than one year, you should discuss with the lender in case of vacations; however, it will likely make the loan due for repayment
How to Receive Your Money
Reverse mortgages can be obtained in the following ways:
- a single lump sum
- regular monthly payments
- a line of credit
- any combination of the above
Reverse mortgages have no effect on your Social Security or your Medicare but have enormous benefits because certain factors that are required for the regular mortgages are not considered (credit requirement, income requirement, and loan repayment requirement), as long as you make the home your primary residence.
With reverse mortgages, after the borrower has passed away, the estate will not be responsible for any outstanding mortgage balance. As a holder of reverse mortgages, you can sell the home, and the proceeds shall be applied to the repayment of the mortgage before you can have access to the remaining funds.
Find out more about Reverse Mortgages