As we all know aging is a part of life. Fortunately, aging can have its perks, especially after you’ve entered the 60 plus age range. According to Mike Fak on WryteStuff.com, he’s found a plethora of perks for hitting 60 years of life. For instance, he now can wear white socks with any outfit, including suits, and not have a care what other people think. He can also justifiably get exhausted assembling his new exercise machine and no longer has to tell the librarian that the large print book he’s checking out is for an aging relative. These are only a few of his perceived 60 plus benefits, but another great one to add to the list is the option of a reverse mortgage.
Now before I dive into the reverse mortgage, let me add that this lovely option actually only applies to those 62 years and older, but once you’ve hit 60, you’re awfully close.
What is a Reverse Mortgage?
Stated simply, a reverse mortgage is a loan that allows you to borrow against your home’s equity. This means that instead of sending the bank a payment every month, they’re sending one to you. Not only that, but the repayment on this loan is delayed and may not have to be paid back in your lifetime. That’s a pretty sweet deal.
So Who Qualifies for a Reverse Mortgage?
Once again, you have to be 62 years of age or older. You must own your home outright or be capable of paying the remainder of your mortgage with proceeds from the reverse mortgage. You must also live in your home and there are certain criteria that your home has to meet according to HUD.
How Much Can I Borrow with My Reverse Mortgage?
This one varies according to several factors including your age, current interest rate, the appraised value of your home and any government enforced lending limits. You have several options for receiving the proceeds of your reverse mortgage. These include a single lump sum, tenure (monthly payments while you live in the home), term (monthly payments for a fixed period of time), and/or a line of credit.
How Does the Reverse Mortgage Get Paid Back?
The three major incidences when the loan will need to be paid are when you pass away, sell your home or move. If you stay in your home until death, the sale of your home or money from your estate will be required to pay back your reverse mortgage. If the sale of your home does not cover the amount of your mortgage, the lender is required to take a loss and they can request reimbursement from the FHA (Federal Housing Administration).
Possible Drawbacks to the Reverse Mortgage:
There are fees associated with reverse mortgages, which usually include mortgage insurance premiums, loan origination fees and closing costs in addition to ongoing insurance and service fees. You must also consider that choosing to pull the equity out of your home now reduces your savings for a later date, when you may need it more.
If you're interested in learning more about reverse mortgages or have other real estate related questions, please feel free to contact me at my website MyRealtoRob.
Find out more about Reverse Mortgaes at AARP Online.
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