Reverse Mortgage

Living on a fixed income can be difficult. Whether youíre relying on pensions, Social Security, or any other form of compensation in your later years, funds often come up short. Finding a reasonable solution for your monthly shortages can be difficult, but if youíre a homeowner with equity in your house, reverse mortgages could be the answer.

Living on a fixed income can be difficult. Whether youíre relying on pensions, Social Security, or any other form of compensation in your later years, funds often come up short. Finding a reasonable solution for your monthly shortages can be difficult, but if youíre a homeowner with equity in your house, reverse mortgages could be the answer.

The reverse mortgage is a unique and often misunderstood loan that allows older homeowners to use a portion of their equity as tax-free income. In order to achieve this, homeowners donít need to sell their home, give up title, or acquire new or additional monthly expenses.

Instead, qualified homeowners aged 62 and older will receive monthly payments from their lender, thus the name of the loan. Funds can be used in whatever manner best fits the needs of the homeowner. Many use it to pay overwhelming medical expenses, do much-needed home repairs, take the vacation of a lifetime, lower other debts with higher interest rates, pay for in-home nursing care, or even to stop foreclosure.
There are several ways in which you can receive the funds garnered from reverse mortgages. Some choose to take a lump sum all at one time while others select fixed monthly payments that may last for the remainder of their lives. The most popular form of this type of mortgage, however, is the line of credit. Just like with a conventional line of credit, homeowners may draw from this account at any time.

Just how much youíll be able to receive from this kind of mortgage will depend on several factors. Lenders will consider the amount you owe on any existing loans, your age, the appraised value of your home, current interest rates, and where your home is located.

Itís not necessary to re-pay this loan while itís outstanding. Instead, the loan will be paid when you cease to own the property either through death or the sale of the home. The amount owed will never exceed the value of your home and any additional monies from the sale of the home, after the reverse mortgage is satisfied, will go to you or your estate.

Securing such a mortgage requires that you meet with a qualified counselor beforehand. A list of counselors can be obtained through the Department of Housing and Urban Development, AARP, or your local Area Agency on Aging.

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