Are you wondering if a reverse mortgage is the right financial decision for you? Today, we’ll discuss what a reverse mortgage is, who it benefits, and what you need to know before making any decisions.
What is a Reverse Mortgage?
A reverse mortgage is a unique loan agreement that allows a homeowner to convert a portion of their home’s equity into cash—without having to sell the home or make monthly mortgage payments.
The borrower can choose to receive the cash in monthly allotments, a lump sum, or by means of a credit line. You don’t have to pay the funds back until you leave the home or pass away—generally, via profit from the sale of the home.
However, a reverse mortgage is not the same as a home equity line of credit. It’s also important to note that you will owe interest on the borrowed amount.
Who is Eligible for a Reverse Mortgage?
Unlike a standard mortgage, reverse mortgages have a few additional eligibility requirements:
Must be 62 years of age or older
Must have more than 50% equity in your home
Must maintain property tax and homeowner’s insurance payments
Must remain living in the home as your primary residence
Of course, the amount you’re eligible to receive is based on your age, the value of your home, and current interest rates.
However, keep in mind that that a reverse mortgage can affect your eligibility for certain government benefits, like SSI or Medicaid. Since you’re borrowing against the equity in your home, if choose to sell the property later, you’ll receive less. Plus, reverse mortgages may have tax implications, so it’s important to talk with a knowledgeable loan expert before making any decisions.
Mortgage and Loan Help
If you’re a homeowner over the age of 62 and are looking for an easy way to supplement your retirement income—while staying in the home you love—a reverse mortgage might be right for you!
Give us a call at 972-213-3220 to find out more.
Comments