Reverse mortgages are financial products that have been around for a while, but just recently started taking off with the population of homeowners who are 62 years of age or older. Chances are you have seen several different newspaper advertisements and commercials that discuss how this type of funding could be the right retirement solution for the right individuals. Determine if you or your parents are the right individuals for reverse mortgages and make the right financial move for your situation.
What is a Reverse Mortgage?
A reverse mortgage is one of the many financial products in the mortgage industry, but works in a very unique way. Also referred to as a lifetime mortgage, it is a loan that is available to seniors 62 or older who own their home and want to use a portion of their home equity as collateral. The borrowers can use the funds from the loan as a source of retirement income. Typically, the loan does not have to be repaid until the last survivor on the loan passes away or leaves the property. At that time, the estate or the borrower has 6 months to pay off the balance of the loan due to the lender.
Are You a Good Candidate for a Reverse Mortgage?
Economic uncertainties have affected hundreds of thousands of seniors who were once looking forward to retirement. Many retirees have found that their retirement accounts do not contain all of the money they need to live comfortably and enjoy their current lifestyle. A reverse mortgage is designed for homeowners who cannot enjoy financial freedom with their other retirement accounts. By taking out this loan, borrowers can regain financial freedom and and live their Golden Years like they had always imagined.
Typically, the best candidates are those who are older and have more equity in their home. A 75 year old applicant will receive a higher payout than a 65 year old applicant because the lender must pay for a longer period of time when the borrower is younger. If you are planning on staying in your home throughout your retirement, this may be the right financial option for you. You can use the funds from the loan to finance your active retirement or even to do home repairs that you could not afford to do otherwise.
A reverse mortgage calculator will help you determine how much of a lump sum payment or how much in monthly payments you will receive based on your age and the value of your home. Determine how much you can receive, get the financial freedom you deserve, and decide if this is the is right solution for you or your parents.