A reverse mortgage would allow older homeowners to leverage the equity in their homes. If you own your home outright or have considerable equity to draw from, you would be able to withdraw a portion of your equity without having to repay it until you leave your home. You have to be of a certain age to consider this option, and in most cases, reverse mortgages only apply to homeowners who are 55 and older.
This type of mortgage is a loan that would allow older homeowners to borrow part of their home’s equity as tax-free income. The lender will pay the homeowner, which is very different from a regular mortgage in which the homeowner makes payments to the lender. There are no monthly payments with reverse mortgages, and you would not have to sell your home, so you can continue to live in it, and it’s only when the borrower permanently moves out, sells the home, or dies that the loan must be repaid.
Like other mortgages, you will own the home in a reverse mortgage situation. The amount you can borrow will depend on the borrower’s age, current interest rates, and the home’s value. The older the homeowner, the more likely they will receive a higher principal limit.
Covering the cost of needed home repairs, paying out-of-pocket medical expenses, and supplementing retirement income are just some reasons a person can consider a reverse mortgage as regular income, or available savings may not be enough to cover such expenses. Reverse mortgages can prevent seniors from turning to costly loans and high-interest lines of credit. However, there are eligibility requirements for a reverse mortgage. In addition to being 55 or older, you must own the property outright, and the home must be occupied as your primary residence. Additionally, you need to be able to continue to make payments on property taxes and homeowners insurance.
You need to consider the advantages and disadvantages of this option to determine if a reverse mortgage is right for you. You would be able to retain possession of a valuable asset and would not have to move or change neighborhoods which can be very hard to do. A reverse mortgage is also generally easier to obtain for an elderly homeowner compared to a line of credit. This option would increase your cash flow so you would have access to money that can be used for any purpose. Whether you need to pay for a new roof, go on a family vacation, pay for your grandchild’s education or want to live a more comfortable life, a reverse mortgage may be ideal.
If this is an option you are interested in, Grover Mortgage Group can provide more information. We will clarify every detail and answer your questions to help you make an informed decision. We will also address your concerns, so do not hesitate to contact us to see how our brokers can help your situation.
