A Reverse Mortgage is a mortgage scheme that pays a percentage of the mortgage balance against the interest only. Unlike other mortgages, which gives you a fixed sum of money that you can spend as per your wish, in a Reverse Mortgage you get a lump sum of money that you can use for any purpose or any occasion you want.
So what is a Reverse Mortgage? Is it the simplest way to buy property? Or is it complicated and messy?
Let’s start with the most important thing you need to understand, is it really just a mortgage or is it something else? Well, for starters, it is a mortgage. And when a person has a mortgage, they are bound to pay the mortgage lenders for the loan. The cost of such a mortgage depends on a lot of factors like the person’s income, the down payment etc, but it will most definitely be much higher than any other type of loan.
In a Reverse Mortgage, the mortgage lenders would recover some amount from the person who has the mortgage. While this is a good plan, but the important point is, the same will continue to live after the person is deceased. So, this is a pretty complex deal.
On the other hand, Reverse Mortgage Pros and Cons will tell you about what is not in a Reverse Mortgage. Let’s look at the real pros first.
For one, the time factor of a Reverse Mortgage is lower than that of other mortgages. You can enjoy the advantage of living while being able to use the money for a myriad of purposes. It will be much easier for you to finance your home and would let you live on your own terms as the interests will keep on accruing, all the years you need. The majority of Reverse Mortgages offer a few years of lower interest rate.
A Reverse Mortgage with fixed rates would give you much more security in terms of future cash flow. In short, a Reverse Mortgage is a very sound choice for those with cash flow and flexibility issues. It is the best way to invest your money now and enjoy it later too.