If you or a loved one is a retired person over the age of 60, you may have recently heard about reverse mortgages. Chances are, unless you specialize in finances, you have a lot of questions about how these loans work. It is important to gather as much information as possible before committing to any loans or mortgages.
Defining Reverse Mortgage
The first question to ask is what a reverse mortgage is. This is a type of home equity loan for seniors, which allows you to convert your equity into cash. Instead of having a monthly mortgage payment, you will actually get paid by the lender to help cover monthly expenses. The loan is paid back after the borrower moves out or dies. They are often considered a last resort; however, they can also make great planning tools for homeowners that are a little tight on cash.
Who Benefits
You may be wondering if are right for you. There are a few specific people that the loans are made to benefit. If you do not plan to move, can’t afford the cost of maintaining your home and have equity in your home that you would like to turn into cash for a rainy day, this may be the option for you.
Uses
There are many uses for this type of loan. You could use it to eliminate your existing mortgage so that your monthly cash flow is improved, or you could use it for unexpected situations such as health emergencies or sudden home repairs. Some people even choose to use it to give them a little more spending money to do what they wanted with their retirement.
If you think you would like to get started with reverse mortgages on your home, consider talking to a financial advisor about your options today. They can get you into the financial counseling you would need to get started.
