You can get a reverse mortgage on your house if you are older than sixty-two years and have your home paid off. What is a reverse mortgage? It’s actually quite simple.
Reverse Mortgage Pros were created to assist the elderly in paying for their living expenses once they have retired or had their income drastically reduce. A reverse mortgage allows a person over sixty-two who has paid their entire home off to get money from their equity.
If a homeowner has paid off their home but still has equity of fifty to one hundred thousand dollars, they can take that equity and have it paid out to them either in a lump sum, or in scheduled payments.
The money will not be paid monthly. The monthly payments will not start until one of the following things happens: The proceeds from the sale would pay off the loan if the borrower dies or the property is sold. The same applies if the property is sold before the death. With the proceeds of the sale, the loan would be paid off.
If the individual must be moved into a full-time care facility, then this is the last option for repayment. The loan must be paid off if the owner of the property has to move into a nursing facility. You can either sell the property, or rent out or lease the property to someone else. The rent or lease payments are made to the loan holder.
Let’s answer the question: What is a reverse loan? This is a way for the elderly to have more financial freedom by using the equity they already own in their home. Before you decide to take the RM plunge, make sure you fully understand all aspects. There are certain pros and cons to reverse mortgages. The closing costs are often much higher than traditional mortgages.
