Reverse Mortgage - Get Paid to Be Retired!

Reverse mortgages pay cash out now - you repay later.

Reverse mortgages lend a relatively new twist to the lending game. The product has been around for more than twenty years, but it hasn’t really taken off until recently. A reverse mortgage, like a home equity loan, allows you to borrow against the equity you have accumulated in your home. The main difference, and it’s a big one, is that you do not have to make payments to repay on a reverse mortgage. The loan, with due interest, does not need to be repaid until the home is sold or until the borrower dies. In the meantime, the borrower can enjoy the cash from the loan, knowing that they have no immediate obligation to repay. 

Reverse mortgages come with a few qualifiers, however. The main one is that the borrower must be at least 62 years of age, and if both members of a married couple have their name on the deed, then both must be at least 62 in order to qualify. Unlike with a traditional mortgage or home equity loan, the borrower does not have to have any appreciable amount of income. In fact, you can take out a reverse mortgage without any income at all! The only thing that matters in qualifying is that there be equity in the home. An additional downside is that reverse mortgages come with adjustable interest rates only.

Here are some things to know about a reverse mortgage:

• The funds may be taken in a lump sum, a series of continuing payments, or as a revolving line of credit. A monthly payout is often preferred by those who may be cash poor but equity rich and simply need a regular income for day to day living expenses. Those with indefinite plans may prefer the line of credit option, with funds available on an as-needed basis. Those who wish to splurge on travel, or a vacation home or a recreational vehicle may wish to take the lump sum.
• The loan need not be repaid until the borrower dies, sells the home, or moves away. There is no repayment schedule. The loan is repaid with interest at the time the home is sold. Keep in mind that the longer the funds are borrowed, the larger the repayment amount, as interest will continue to accrue until the loan is repaid in full.
• A bonus is the fact that the repayment amount, with interest, cannot exceed the value of the equity of the home at the time it is sold, even if that amount is less than the value of the loan! If you borrow against your home with a reverse mortgage, and your home decreases in value, you win! The lender cannot recoup more than the value of the home.

A reverse mortgage is clearly not for everyone, and the age requirement will eliminate may prospective borrowers. For those who are over 62, a reverse mortgage could be just the ticket to a better retirement. Thousands of senior citizens have learned that the key to a great retirement might literally be right under their own roof.