by Amy Lillard
Reverse mortgages are designed for an important transition in your life. When you bought your home, you had income. You needed equity and the joys that home living can bring. Now, your situation is reversed. You have equity, and want to maintain the joys of home living. You need income.
A reverse mortgage is a method for people like you to obtain money from your home. It's a loan against your home that requires no repayment as long as you live there. You as the homeowner receive a sum of money from a lender, usually a bank, based on several things, including the value of the house, the age of the borrower and current interest rates. Reverse mortgages are designed specifically for older homeowners to free up a source of income for any expenses necessary, including healthcare.Refinance at Today's Low Rates!
You qualify for a reverse mortgage if:
For specific types of reverse mortgages, such as the popular and federally-insured "Home Equity Conversion Mortgage" (HECM), other restrictions apply. For example, under this mortgage your home must be a single-family property, a 2-4 unit building, or a federally-approved condo or planned unit development (PUD). Another popular type of reverse mortgage, the "HomeKeeper" mortgage from Fannie Mae, specifies that you must own a single family home, PUD or condo.
Money obtained through reverse mortgages can be used for anything. You can supplement retirement income, repair or modify your home, pay for health care, buy a new car, cover property taxes, and more. You can choose to receive the money in the method most appropriate to you, including lump sum, monthly payments, or line of credit. This last option is by far the most popular with reverse mortgage recipients, and it allows borrowers to draw on the loan proceeds at any time. Your reverse mortgage loan must be repaid only when you cease to occupy your home.
Get Monthly Income with a Reverse Mortgage
Reverse mortgages should be considered carefully for several potential drawbacks:
Thankfully, a provision exists that protects potential reverse mortgage borrowers. Counseling is required for all reverse mortgages so that you fully understand the program and the ramifications before applying. In addition, there are several helpful sites online to explain reverse mortgages in detail and direct you towards more information.
Thinking about a reverse mortgage?
Other related articles: