Reverse Mortgages

Reverse Mortgages

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.

What is a Reverse Mortgage?

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.

What are the benefits of a Reverse Mortgage?

There are several important benefits which a reverse mortgage can provide you with, like;

  • No monthly payments
  • You can stay there as long as you please, no matter the loan balance
  • You do not have to pay any money until the last borrower either moves out or passes away
  • You never owe more than the houses value, and it is the only asset which is used when paying for the home
  • The reverse mortage is insured and regulated by the FHA, meaning you are completely safe
  • You can pay it back at any time with no pre-payment penalties
  • You can pass the home onto your heirs

Who can apply for a Reverse Mortgage?

Anybody who:

  • is sixty two or older; all borrowers must be this age.
  • lives at the home as your primary place of residence.
  • has no federal debt.
  • has no existing mortgage on their home, unless it’s small enough to be paid off by the reverse mortgage.

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.

Prime Retirement Option

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.

One Response to “Reverse Mortgages”

  1. sarah says:

    I have heard so much about reverse mortgages, both good and bad, and you have made more sense of them than anyone else has for me. My grandmother is considering one and I wanted to know all I can about it to help her through the process.

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