Reverse mortgages are designed to provide those who are retired, or near retirement with a way to keep on getting an income, or money to meet other expenses as they grow older. While it may not be the way for everyone, it certainly is a valid option for many. Here are some things you need to know about reverse mortgages to help decide if one should be in your near future.
What Is It For?
The purpose of a reverse mortgage is to provide some income so that a person 62 and older can be able to continue at a higher level of living than what social security alone could do. This is especially important because of the way that social security and the economy is headed.
Where Does The Money Come From?
The money comes from the equity that is built up in the house over the years. This means that the more equity there is, the greater the payments could be. The amount of money that is still owed on any outstanding mortgages is paid off immediately, and payments are based on the balance.
What Are The Qualifications?
A reverse mortgage is for any homeowner that is aged 62 or older. They must be a homeowner and have some equity in the home. There are absolutely no conditions as far as amount of income needed since you actually make no payments to them. This means anyone can qualify.
What Are The Terms?
As long as the named individual lives in the house, no payment needs to be made. An individual can also put their spouse or another named person onto the mortgage, so that it will not need to be sold to make repayment until the house is no longer needed.
How Is The Money Received?
The way that you receive the money is largely left up to your choice. This is because it is your money and you are free to use it as you wish. You can get a lump sum – if you want, or one of several other options. There is the option of getting monthly payments, or monthly payments over a specified period of time, and a line of credit is possible, too. You can also get a combination of any of these, too.
Is The Estate Lost?
You are able to keep your estate when the home is sold. Profits can be made from the sale
if the home sells for more than was paid out and applied to the estate.
What Charges May Apply?
Just like most mortgages, a reverse mortgage has most of the typical fees that apply to any mortgage. There are closing costs and service fees that will probably bring it up to somewhere between five to seven thousand dollars.
You want to take the necessary time to look over all the details when you start thinking about getting a reverse mortgage on your home. Federal reverse mortgages require professional counseling in order to help you understand all the issues and help you to be sure of your next decision to get one. Compare several offers in order to be sure you are getting the best deal.