Are you over 62 years, looking for a little extra money and own most if not all of your home? If the answer is yes, then a reverse mortgage may be exactly what you’re looking for. Here are some of the benefits a reverse mortgage can offer you:
#1: Reverse mortgages pay you. Instead of making payments to a lender, the lender makes payments to you. Of course as payments are made, your equity in your home decreases. It is, however, a great option if you don’t plan on leaving your home to family members after you’re gone.
#2: You can use the money you receive any way you choose. For example, it can be used to put your children or grandchildren through college, to buy groceries, to pay for healthcare, to buy a new car or to go on that dream vacation you’ve been putting off for 30 years.
#3: You can receive your money in a variety of ways:
* Lump sum
* Fixed monthly payments either for a set term or for as long as you live in the home
* A line of credit
* A combination of the above.
#4: A reverse mortgage isn’t limited to single family homes. In fact, unless you own a manufactured home built before 1976 or an apartment in cooperative housing, your home likely qualifies.
#5: Your benefits, Social Security or Medicare are not affected by a reverse mortgage. However, if you are on Medicaid, any reverse mortgage proceeds must be used immediately to continue to qualify for Medicaid.
#6: No more monthly payments. You can use a reverse mortgage to pay off any existing debts. And your reverse mortgage loan is repaid when you no longer live in your home as a principal residence. The amount owed can never exceed the value of your home. Even better, if your home is sold and the proceeds exceed the amount you owe on your reverse mortgage, you or your estate receives the profits.
While a reverse mortgage is generally an excellent idea for many, there are a few drawbacks. Service fees and closing costs can make a reverse mortgage an expensive option, particularly if you’re planning on selling the home in a few years. If you’re not planning on living in the house a long time you may want to consider a home equity loan, because they’re much less expensive and you can still take the dream vacation you’re looking for.