What is a reverse mortgage?
A reverse mortgage is a type of loan that allows homeowners 62 years of age or older to borrow money against the equity in their homes without having to make monthly mortgage payments.
How does a reverse mortgage work?
With a reverse mortgage, the lender advances the homeowner a sum of money that is secured by the home. The homeowner does not have to repay the loan until they sell the home, move out, or pass away.
- The loan is typically repaid from the proceeds of the home sale.
- If the homeowner moves out of the home, the loan becomes due and payable.
- If the homeowner passes away, the heirs can either repay the loan or sell the home to repay the loan.
What are the benefits of a reverse mortgage?
- Can provide homeowners with a source of income in retirement.
- Can help homeowners to pay for medical expenses, home repairs, or other expenses.
- Can help homeowners to stay in their homes longer.
What are the risks of a reverse mortgage?
- The loan balance can grow over time, which can reduce the amount of equity the homeowner has in the home.
- The homeowner may have to pay closing costs and other fees when they take out a reverse mortgage.
- The homeowner may have to pay taxes on the money they receive from a reverse mortgage.
- The homeowner may have to sell the home if they can no longer afford to live there.
Is a reverse mortgage right for me?
A reverse mortgage may be a good option for homeowners who are 62 years of age or older and who need a source of income in retirement. However, it is important to weigh the benefits and risks of a reverse mortgage before making a decision.
Kind regards E. Thompson