Reverse Mortgage Resources
Homeowners aged 62 and older are eligible for a unique type of loan: the reverse mortgage.
A reverse mortage is similar to a home equity loan in that it allows senior homeowners to borrow against the equity in their home. But there's a big difference - a reverse mortgage does not require monthly loan repayments. In fact, the loan is repaid only when the homeowner dies, permanently moves away or sells the property.
In the right circumstances, a reverse mortgage can be an excellent means to turn home equity into cash to help pay for retirement living expenses, healthcare bills, major repairs, consolidate other debts or any other purpose you can imagine. Today's reverse mortgage programs are very flexible. You can choose to have the loan proceeds paid to you in one lump sum, as a monthly annuity for the rest of your life, or as a line of credit allowing you to choose when and how much you'll draw down. Perhaps the biggest selling point is that no matter how long you live or how large the loan balance grows, you can never owe more than the market value of the home.
There are some drawbacks, however. First, closing costs and fees can be quite high compared to other loans. Because of this, a reverse mortgage is cost-effective only if you are in generally good health and can plan to stay in the home for at least five years. Spreading the high upfront costs over several years makes the reverse mortgage option much more attractive.
Second, reverse mortgages are complex and hard to understand for many people who have spent their adult lives paying down mortgage balances, not growing them. It is very important, therefore, that potential reverse mortgage borrowers take time to educate themselves about how reverse mortgages work, the different types of reverse mortgages, the interest rates used for reverse mortgages, and the process for obtaining a reverse mortgage.
Following are some excellent reverse mortgage information resources if you are interested in learning more about this type of loan:
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