Reverse Mortgage

A reverse mortgage is a type of loan that allows homeowners who age ranges from 55 to 85 years old  to borrow against the equity in their home. Unlike a traditional mortgage, where the borrower makes monthly payments to the lender, with a reverse mortgage, the lender makes payments to the borrower.

How does a reverse mortgage function?

To be eligible for a reverse mortgage, you need to own a home, be at least 55 years old, and have sufficient home equity. The amount of tax-free cash you can qualify for depends on your age and the appraised value of your home. The loan is repaid when your home is sold, or when the last borrower moves out or passes away.

What are the advantages and disadvantages of a reverse mortgage?

Before deciding whether to proceed with a reverse mortgage, there are various factors to consider. It’s important to have an understanding of the benefits and drawbacks associated with this decision. Some factors to consider include:

Benefits:

– Maintain ownership of your home while living in it.

– Only need to keep up with property taxes, insurance, and maintenance costs.

– Flexibility to choose whether or not to make monthly payments.

– Non-recourse loan, ensuring that neither you nor your heirs are responsible for any mortgage amount exceeding the home value, as long as property taxes and insurance are paid.

– Various options available for receiving funds, whether all at once or gradually over time.

Drawbacks:

– Potential for higher interest rates compared to other secured lending options due to the absence of monthly mortgage payments.

– It’s advisable to consult with a Mortgage Professional who can address your unique circumstances and answer your questions.