What Is A Reverse Mortgage?
Reverse mortgages are becoming popular among the senior citizens. They give seniors easy money in lieu of the part ownership of their home.
If you want to go for a reverse mortgage, the information below will help you:
What is reverse mortgage?
For senior citizens above 62 years, lenders offer instant cash without any monthly payments. This allows the pensioners with a home, but no cash, to get easy financing to meet their daily needs or for any other purposes. This allows them to convert their equity tied up in their home into cash.
What are the advantages and risks of this type of mortgage?
This mortgage allows you to reside in your own home. You get monthly income which will help you maintain a comfortable standard of living.
The money generated is non-taxable since it is a loan and not income. In the short term, the advantages seem to be very attractive but in the long term the risks far outweigh the benefits. Unlike a conventional mortgage, in reverse mortgages the lender pays you money based on the equity in the home. But in return the lender imposes strict conditions on you. You get the mortgage only on the primary residence. So if there is another home where you do not reside, you will not get the mortgage. If you die, sell home or change your main residence, you need to pay back the loan along with the accrued interest. To do that, you will have to sell off the home. Also, this mortgage can erode the accumulated equity in the house rapidly. Besides, if you want to leave the house as an inheritance, you will not be able to do so.
How much mortgage will I get?
You can get any amount between 10 to 40% of the value of home obtained after appraisal. It is directly dependent on your age, the present rate of interest and the value of the property.
You can get free online reverse mortgage quotes through the internet. There are lots of reverse mortgage websites, which would be useful to you.