If you listen to many of the economists in America today, they’ll tell you reverse mortgages are fueling the economy. So, what is a reverse mortgage?
Reverse Mortgages Free up Equity from your Home
Reverse mortgages are available to homeowners over the age of 62 looking to free-up part of the equity in their homes as tax-free income. The benefit of a reverse mortgage is the homeowner neither has to sell their home nor do they need to be burdened with monthly mortgage repayments, as repayment of the principal debt is made when the homeowner either sells the home or passes away.
Homeowners who wish to take advantage of a reverse mortgage can do so either as one lump-sum payment or via a line of credit that allows them to use the funds as and when the need requires. The latter of these two options is the more popular as it allows the borrower to supplement and pension payments they receive without having to lose any of the quality of life they had when working.
Known as reverse mortgages as payment(s) is made by the lender to the borrower, rather than the borrower to the lender, retirees looking to take advantage of a reverse mortgage will be happy to know that they will not lose any of their existing pension or benefit rights.
Reverse Mortgage and their Effect on Your Estate
As a reverse mortgage may have some effect on your estate or long-term financial planning, you are required to undertake mandatory counseling to ensure you understand the financial and legal consequences of a reverse mortgage and to ensure that no other financial alternative is available that may be more appropriate to your circumstances.
Nonetheless, if you are a recent retiree looking for the holiday of a life time, to redecorate your home, or simply looking to free up some hard earned equity to supplement your monthly income, a reverse mortgage could be the answer you’re looking for.