Are you interested in a reverse mortgage? If so, there are a few things you need to know before you decide to move forward. This is a big financial decision, and one that is going to affect you in a number of different ways for the rest of your life. It is very important to consider both the pros and cons.
Reverse Mortgage Information To Consider
1. There is a big difference between a reverse mortgage and a home equity loan.
With an equity line of credit you must have enough income to qualify for the loan. For this reason, many people are turned down time and time again. On the other side, a reverse mortgage is available regardless of how much money you earn.
Also, it is important to note that you do not make payments with a reverse mortgage. Simply put, the loan is not due as long as you keep the house as your primary residence.
2. The lender cannot take your home away, even if you outlive the loan.
This is a common myth that keeps many people from considering a reverse mortgage. As long as you continue to live in the home and pay your taxes and insurance the lender can never take your property.
3. You may still have something to leave behind to your heirs.
When your home is sold, you or your estate will be responsible for paying the cash that was received from the reverse mortgage as well as any fees and interest. Once all this money is paid out, the remaining equity belongs to your heirs. In many cases, there is still a sizable amount of money left behind from the sale of your home.
4. How much money can I get from a reverse mortgage?
This is the question that most people ask before they do anything else. Simply put, they don’t want to move forward unless they feel that they are getting the right sum of money in return. The amount that you can borrow depends on many factors including: age, the value of your home, and the current interest rate. In most cases, the older you are and the more your home is worth the more money you can borrow.
5. You can receive the money from your reverse mortgage in a number of different ways.Your options include:
Term – equal monthly payments for a set period of time.
Tenure – equal monthly payments for as long as one of the borrowers uses the home as their primary residence.
Line of credit – unscheduled payments that can be made to you as needed and until your line of credit is gone.
Modified term – a combination of fixed payments and a line of credit. Modified tenure – a combination of payments and a line of credit for as long as the borrower remains in the home.
Lump sum – receive all the money at the same time.
If you are interested in a reverse mortgage it is important that you consider the above reverse mortgage information, as well as any others points that are important to you.