What Retirees Should Know About Reverse Mortgages

Reverse mortgages can be a great financial tool for those who are in retirement or are planning to retire soon. Many retirees are challenged with ensuring that their savings can last, and with the rising cost of living and a longer lifespan, retirees are looking at alternative ways to gain financial stability for their retirement. Before considering a reverse mortgage, learn what every retiree should know to understand how this product works.

What is a Reverse Mortgage?

A reverse mortgage is a special loan that allows senior homeowners to use a portion of their home equity and turn it into cash Reverse mortgages have special requirements, such as needing at least one of the homeowners be at least 62 years of age and that they must continue to live in the home as their primary residence. With a reverse mortgage, borrowers are not required to make monthly payments until they are no longer meeting the requirements of the loan.

How much does a reverse mortgage cost?

A reverse mortgage can vary depending on the individual. The fees that may be included in a reverse mortgage are the mortgage insurance premium, HECM origination fees, and third party fees such as title insurance, appraisal fees, etc. If there is enough equity to cover the costs, then it is possible for these fees to be rolled into the loan.

Who owns the home in a reverse mortgage?

A huge misconception about reverse mortgages is that some people believe that when you have a reverse mortgage, the lender owns your home. As long as you continue to live in the home, the title and property continues to belong to you and NOT the lender.

When does the reverse mortgage loan become due?

Unlike most regular loans, reverse mortgages do not have a maturity date, but instead, they have a maturity date, which means that if any of the following actions takes place, then the loan becomes due.  The borrowers must continue to live on the property as their primary residence, and they must continue to keep up with the home insurance and property taxes on the home. As long as the borrower is able to keep up with the stipulations of the loan, then they are not required to make monthly payments.

Reverse mortgages can provide homeowners with the financial stability that they are looking for. To learn more about reverse mortgages, contact 1-888-808-8486 to speak with a Senior Advisor.

Image courtesy of [Stuart Miles] / FreeDigitalPhotos.net