Reverse Mortgage Solutions
Planning for retirement is among the wisest decisions an individual can make. Most people, especially in this generation, live for the now without any thought of what will transpire when they are eased out of their jobs, and into retirement. That is where the conversation regarding reverse mortgage arises. A reverse-mortgage is a retirement tool that allows retirees to still increase their income by using one of their greatest assets: their home’s equity.
This type of mortgage allows a homeowner to borrow money against their home equity, while maintaining ownership. For this, one needs a qualified loan officer to help them navigate through the paperwork and grey areas. But before looking at what they do, understanding basic information about reverse mortgages is appropriate.
About Reverse Mortgages
A reverse mortgage increases funding for individuals who want to live comfortable lives while they are in retirement. This allows a retiree to stay in their home, and increase their income without making monthly payments. Unlike conventional mortgages, one does not pay monthly payments. Instead, the lender makes payments to the given borrower through credit, monthly payments, or lump sum. In fact, instead of one paying the bank monthly, the bank pays the borrower and the equity shrinks. The reverse mortgage is repaid when the borrower either dies, leaves the property, or sells it.
Who is eligible for the mortgage?
Persons who are 62 years and above qualify for a reverse mortgage. What will determine the amount of equity one will get is the:
- Value of their home.
- Their age.
- The interest rates at the time.
One is eligible for more money if they are older and if their home is of considerable value. In these circumstances, there will be additional proceeds available. One may use a reverse mortgage calculator to find out how much they will be paid for the mortgage. To calculate this, one must key in personal information, their home’s worth, along with other information, such as monthly payments on their mortgage.
Debunking myths about reverse mortgage
One bit of misinformation about this mortgage is that a retiree and their heirs will be stuck with a huge bill as the loan can exceed the value of property. The fact is that a reverse-mortgage is a non-recourse loan, meaning that one will never be owed anything more than the appraised value of their home. Another misconception is that reverse mortgage will lead to one’s eviction from their home. The truth is that no one will be harassed to leave their home. One leaves their home at their own volition or pleasure. The mortgage is not due until one’s home is not their permanent residence.
Reverse mortgages negatives
Reverse mortgages can be costly. They are accompanied by fees such as: loan origination fees, mortgage insurance fees, insurance fees, interest rates, appraisal fees, and other closing costs. It can be expensive as compared to conventional mortgages. This mortgage affects the value of one’s home by decreasing the equity in one’s home, leaving heirs with less money.