Getting through retirement can be tough! Have you considered the reverse home mortgage?
Sometimes, no matter how hard you plan for your retirement you just don’t have enough to cover everything. Or what if illness or an accident happens? That’s my fear. Getting hurt when I retire. How will cover those medical expenses? There are plenty of financial aid options out there that can help your cash flow when you’re retired. One of them is the reverse home mortgage.
Can I use it to pay off my original mortgage?
Actually, you can. You cannot have two home loans at the same time. That’s the law. So you can use the reverse mortgage loan to pay off your original loan. Once that is done, the rest is yours to do with as you please. You even have options on how you want to receive the rest of the money. Plus, as long as you own the home and its your primary residence, and as long you pay your taxes and insurance as well as keep up the house, you don’t have to repay the loan.
Okay, so how do I get paid from my reverse mortgage?
Reverse mortgages aren’t like a typical loan. Instead of paying it back right away, this loan pays you. You get a percentage of your home’s value instead. Yes, you get paid for taking out a loan on your home. You can receive this payout as a lump sum, as a line of credit to use whenever you need it or as monthly payments until the cash is depleted. The flexibility in a reverse mortgage is pretty awesome. If you have to use part of it to pay off your original mortgage, how you get the rest is up to you.
How much can I borrow?
How much you can borrow with a reverse mortgage depends on a couple of things. Having a reverse mortgage calculator at your disposal you can figure out how much you’ll get based on the current value of your home, your credit worthiness and the current federal law deciding what percentage is available. The federal law is always changing, as is the value of your home. You can find a reverse mortgage calculator online and plug in the numbers yourself to see if it’s a good time to apply for one of these loans. If it is, you and your lender can work together to get it approved and decide how to get your payments.
Beside my current mortgage, what other costs are involved in getting a reverse mortgage?
Your current home mortgage has to be dealt with first. The funds for this will come out first and your old mortgage settles. You will then have to pay closing costs, just like you would pay on a traditional home loan. If there are any other outstanding fees regarding your home, you should pay them up front as well. Whatever is left is yours to spend.
Because you won’t start paying on the reverse mortgage until your home is sold, you won’t have to make a payment on your reverse mortgage loan. It does accrue interest, so what you wind up paying back will be greater than what you borrowed.