|
Your retirement years should be spent without financial worry. If you're 62 or older, now may be the time to consider a reverse mortgage to unlock the wealth you've built up under your own roof. Furthermore, you can do it while still living in your home and remaining the owner.
That's right! Stay in your house and receive income for life with a reverse mortgage!
How a reverse mortgage protects you:
If you're 62 or older, a reverse mortgage is safe and secure because it is regulated by the federal government agency of Housing & Urban Development (HUD), and insured by the Federal Housing Authority (FHA). It may be an ideal way for you to use your home to get the cash you need in retirement.
Reverse mortgages are unique and often misunderstood, but as you learn about their advantages, keep these "Four Nevers" of reverse mortgages in mind:
As long as you remain in your home, you will:
- Never have to make a monthly payment
- Never be forced to move
- Never owe more than the sale price of your home
- Never give up title and ownership of your home
A reverse mortgage, combined with an annuity, pays money to you, as though you had sold your house. You can receive monthly payments or a lump-sum payout based on the value of your house, but you'll never owe more than your house is worth. You can use that lump sum payout to purchase a tax-deferred annuity or an income annuity. Moreover, you'll never have to move or give up ownership. The house remains yours, just as it is today, and you get the monthly income you desire to make the most of your retirement. Keep in mind that you would still be responsible for any state, local, and school taxes that are due annually on the property.
What makes it a "reverse" mortgage?
A reverse mortgage is a loan whose features make it essentially the reverse of a traditional "forward" mortgage:
- Instead of paying your lender, your lender pays you.
- Instead of reducing your debt as the loan term progresses, you increase it.
- Instead of turning your income into equity, you turn your equity into income.
That last feature - the ability to turn your equity into income - is what most distinguishes a reverse mortgage from other loans, and it's what makes it so valuable to many senior homeowners. Having spent years repaying the mortgage that allowed you to buy your home, you can now tap into that investment to help you achieve your goals later in life.
However you plan to use your equity - whether traveling, paying medical expenses, improving your home, or just adding a bit of cushion to your monthly budget - you'll have a golden opportunity to put your nest egg to good use.
What happens to my home?
Nothing! You remain the owner for as long as you live there, and you will never be forced to move. If you decide to sell or move from your home, the outstanding balance of your reverse mortgage will become due, just as it would with a traditional mortgage.
Unlike a traditional mortgage, however, your balance can never exceed the value of your home when you sell it. So, no matter how much money you receive through your reverse mortgage, you will never owe more than your home is worth. Having that assurance is important. After all, you've put a lot of money into your home, and you should have control over how to take it out.
Who is eligible?
To be eligible for a reverse mortgage, all owners listed on the home's title must be at least 62 years of age and occupy the home as their principal residence for the majority of the year. The property must be a single-family or a two-to-four unit dwelling. Town homes, detached homes, condominium units, planned unit developments (PUDs), and some manufactured homes are also eligible.
Speaking with an approved reverse mortgage counselor is another important eligibility requirement. The Department of Housing and Urban Development (HUD) supervises counseling agencies that can work with you in person or, more commonly, over the phone.
Click here for more information
|
