Use A Reverse Mortgage To Let Your Home Pay For Your Retirement
By Wade Robins
It’s no secret that as hundred of thousands of Americans hit retirement age each month, they are being confronted with the fact that in spite of their best efforts, their retirement nest eggs are simply inadequate. Their pensions have evaporated; the monthly social security check is only a drop in the bucket for them; and their health insurance premiums are rapidly becoming the biggest expenses in their monthly budgets.

But a very large number of these people may be overlooking one thing: their home ownership makes them eligible for reverse mortgages, which will very possibly be the answer to their retirement woes. Many of those who own homes are afraid to consider reverse mortgages, because they don’t realize that getting a reverse mortgage will never threaten their home ownership. If they choose to, they can remain in their homes until they die.

Any homeowner above 62 who has completely or almost paid off an existing mortgage and who commits to living in his or her home for at least 50% of every year can qualify for a reverse mortgage. The amount which a homeowner can borrow as a reverse mortgage will be determined by the appraised value of the home, and can be received as a single cash payment, a line of credit, continuing monthly payments, or all three.

Your Home Will Remain Yours

But the overwhelming advantage of getting a reverse mortgage is, for most seniors, the fact that it will never threaten their home ownership, unlike traditional home equity loans, because instead of having to pay back the loan each month, the loan is not payable until they decide to sell their homes or live elsewhere more than half the year. When they either sell or leave the home, they will be required to pay back the balance on their reverse mortgage as well as the accumulated interest.

Homeowners who sell their homes for more than what is owed on their reverse mortgages will keep the extra cash but even if their home sells for less than what they owe, they are not responsible to make up the difference. All reverse mortgages are guaranteed so that the lender will have insurance to cover any owed balances not cleared when the home is sold.

Your Responsibilities

If a reverse mortgage sounds like the way out of your undefended retirement, just keep in mind that because you remain your home’s owner, you are also the party responsible for property taxes, insurance, and maintenance expenses. You will change absolutely nothing about how you care for your home, because it remains yours thorough out the duration of your reverse mortgage.

The amount of money you will receive in a reverse mortgage is determined by several things, including the appraisal of your home, your age, and how long people of your age usually remain in their homes. Your application fee will be used to pay for the appraisal and home inspections. Your income and credit record never enter the equation.

Reverse mortgage rates generally mirror those on regular mortgages, and like regular mortgages are tied to the prime lending rate, so will fluctuate as the Federal Reserve adjusts the prime lending rate from time to time.