Benefits of Reverse Mortgages and Things You Must Know About Them
You may have heard about reverse mortgages, which might have something to do with how popular they’ve become. They are a safe and simple way to have additional income if you’re a senior citizen. You can supplement your retirement income to take care of your expenses, take a much needed holiday with your significant other or pay for your monthly expenses if you’re short on cash.
Reverse mortgages bring great benefits including going on that vacation you’ve always dreamed of . . .
How Reverse Mortgages Help Senior Citizens
Some people feel reserved about reverse mortgages but the truth is that there’s nothing to be apprehensive about. Reverse mortgages let you spend the value of your house while you are still living in the home. You don’t have to worry about the expenses since they are coming from the payments you get from a reverse mortgage. It’s a way to ease your financial troubles and allow more time for relaxation and enjoyment.
Reverse mortgages actually pay you to continue living in your home. To put it in simplistic terms, you are simply borrowing the money that you would have gotten if you sold the house. You can use the money that you get from the reverse mortgage to pay for the house’s maintenance and expenses if you’re in a bad spot financially, after retirement or you can use it to go on that vacation you’ve been putting off for the last decade.
If your aspirations are vocational or education at a reputable college, you can fund that with the money you get from the reverse mortgage. You can even hire a kind and considerate person to cook or clean for you with that money. Think about it, you can help out the younger generation in exchange for them helping you out. There are possibilities endless.
Some Things you Need to Know About Reverse Mortgages
As a concept, reverse mortgage seems counterintuitive, especially since traditional mortgages require you to pay the lender instead of the opposite. It might seem difficult to understand, but here are some things that may ease you into it:
- The lender for a reverse mortgage takes factors such as your age, the appraised value of your home and interest rates before giving you the reverse mortgage. The lender gives you a percentage of the money that you would get of you sold your home at the appraised value.
- You never have to pay it back until you move out of the home. The home with the reverse mortgage should be your primary residence.
- You are still the home owner. The lender isn’t the owner by default of giving you the reverse mortgage.
- You get your preferred way of payment, whether lump sum or deferred monthly payments, solving your cash flow issues, if you have them.
Perhaps the biggest advantage of having a reverse mortgage is that you can get more money when you need it without having to let go of an asset that you worked so hard for.