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Many of us have heard of the term “reverse mortgage” but don’t know what it actually is. The concept has often been poorly explained to the public, leading to a lot of misinformation about reverse mortgages. However, they can offer a good supplement to income in your retirement.
A Reverse Mortgage , technically called a “Home Equity Conversion Mortgage”, is perhaps best understood as a kind of home equity loan. The general idea is that you get stay in your home, and you receive cash, either monthly, in a lump sum, or as a line of credit. The difference from a traditional home equity loan is that you do not make any payments on a reverse mortgage until you sell or move out of your home.
It is typically, as the name implies, the reverse of a normal mortgage. Rather than paying off the debt in installments, you eliminate your payments and any charges that are made over the time of you being in the house are added to the balance to be paid when you leave.
There are several important benefits which a reverse mortgage can provide you with, like;
You don’t have to qualify yourself with income statements or credit checks, other than checking for poor tax payments etc. but even those with a poor credit rating and very little income can secure a Reverse Mortgage.
The Reverse Mortgage scheme is a good supplemental retirement option for someone who has equity in a home and needs supplemental income. After a hard life of working to pay your debts and keep everybody fed, clothed and happy, you deserve a little relaxation time to enjoy yourself! You can take out virtually every payment in one swoop and although a Reverse Mortgage is not right for everybody, it offers a solid solution to many families.