In light of tighter mortgage regulations over the past year, consumers are looking for other mortgage solutions, including reverse mortgages. Reverse mortgages have sometimes had a negative connotation. This article will expose misconceptions and help you determine if a reverse mortgage could benefit you.
A reverse mortgage allows you to use equity in your property to supplement your income. This can be done through a lump sum payment or regular withdrawals.
Benefits of a reverse mortgage
What are the benefits of a reverse mortgage?
For most people, their net worth is locked in equity. Having access to these funds may allow you more financial flexibility. With a reverse mortgage, no payment is required during the term of the mortgage. For example, you can access up to 55% of your home equity while staying as long as possible. The reverse mortgage will be payable when you sell or live in your home; the remaining capital will flow to your estate.
Reverse mortgage not include payments
How does the reverse mortgage not include payments?
In the case of a reverse mortgage, all accrued interest is added to your mortgage. The increase in the mortgage will not exceed 55% of the value of the home, thus allowing you to keep value in the property for sale or keep it if prices fall. In addition, if the price of your home increases, you can get more capital.
What are the eligibility criteria?
To be eligible for a reverse mortgage, you and your spouse (if any) must be over age 55 and have title to the home. In addition, you must have equity available in the home and the property is your main residence. Current mortgages or a secured line of credit are added to the reverse mortgage.
If your pension is not enough to pay the monthly bills and you can access equity in your property, a reverse mortgage could be a good solution for you.