Use a Reverse Mortgage to Stabilize Your Income
The stress of economic woes in the United States and the political uncertainty surrounding social security or the lack thereof in the future is quite a burden for retirees and people quickly approaching retirement. It is becoming increasingly difficult to accept that one can live comfortably on a fixed income largely based on social security when the government is spending money at increasingly higher levels. if you are worried about living on a fixed income, but have a fully owned home, you should really look in to the potential benefits of a reverse mortgage.
What is a reverse mortgage?
In the simplest of terms, a reverse mortgage is a special type of home loan that allows you to use the equity of your home as a means to provide you with cash. Assuming you meet the requirements set forth by your lender, you can take cash out of your house, but unlike a traditional home equity loan or second mortgage, you are not required to repay it until you no longer use the home as your principal residence.
How much can you borrow?
While different lenders have specific guidelines, typically the amount you can borrow depends on your age, the current market interest rates, and the appraised value of your home. A rule of thumb is that the more valuable your home is, the lower the interest rate and the older you are, the more you can borrow.
Is this a second mortgage or home equity line of credit?
No, a reverse mortgage is nothing like a traditional home loan. unlike a second mortgage or home equity line of credit, your current income will not likely impact the approval process. you will not fret over debt to income ratios or monthly payments. you don’t make payments, because the loan is not due as long as the house is your principal residence. just like anyone else who owns their home, your payment requirements will be limited to real estate taxes, insurance and other regular utility expenses.
Do you qualify for a reverse mortgage?
While you should ask your lender for specifics, typical qualification criteria are that you own your home, that you are 62 years of age or older, and that you live in your home. you will likely be required to receive consumer information from a counselor prior to obtaining your loan. this information is to ensure that you understand the implications of a reverse mortgage. the biggest item that you need to understand is that when your house is sold, you will pay off the loan out of the proceeds.
A reverse mortgage is surely not the answer for everyone. A little research on your part though could lead you to a definite increase in financial security.
Use a Reverse Mortgage to Stabilize Your Income
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