Understanding What a Reverse Home Mortgage is and What it is Not
By John Mazzara
Today it’s getting harder and harder for seniors to have the retirement that they want to have, but one option that is out there is a reverse home mortgage which can be a huge help to seniors who happen to own their own home. However, there are many people who have heard of this option but who are not totally informed about it, what it is, and how it can help them. A reverse mortgage may be a great option for you, but it’s not for everyone. So, before you can make any decision, it is important that you learn more about how it works. Let’s take a closer look at what a reverse mortgage is not and what exactly a reverse home mortgage is.
What a Reverse Home Mortgage is NOT!
Before you can fully understand what a reverse mortgage is, you need to be able to understand what it is NOT. So, let’s take a look at what a reverse mortgage is not.
- A Way the Bank Gets Your Home – First of all, it’s so important that you understand that a reverse home mortgage is not a way that the bank is going to be able to get your home. In no way can you just lose your home when you go with this option. Although you may have to pay back the loan at some point if you move from the home or decide to sell it, they are not just going to get your home. It’s much different than a regular mortgage and you do not need to worry about someone trying to take your home away from you.
- A Home Equity Loan – Many people think that a reverse mortgage is basically a home equity loan, but this is in no way a traditional home equity loan. The terms are much different and it works in an entirely different way.
- Based on Your Credit or Income – Another thing that a reverse mortgage is NOT is that it is not based on your credit or the income that you make. Even if you have bad credit, you may be able to get one of these reverse mortgage and they are available to everyone, no matter how much money you make.
- Free Money – Of course it’s also important to understand that a reverse home mortgage is NOT free money either. The money you get is against the equity in your home, and at some point that money is going to have to be paid back. So, this is not a quick and easy way that you can get some free money either.
- An Easy Decision – Deciding on a reverse home mortgage is NOT something that should be an easy decision or taken very lightly. There is a lot to this option and you need to take the time to do your research and get some financial counseling before you decide that this is the best option for your needs.
What is a Reverse Home Mortgage?
Now it’s important that you take a look at what a reverse home mortgage actually is. Basically a reverse mortgage is a great tool that can help you with financial planning when you are in your retirement years. It basically works opposite of a regular mortgage, with the company actually paying out payments to you. The requirements are that you have to be at least 62 and the home must be your primary residence. You’ll find that most single family homes do qualify for these loans and even if you don’t have a lot of income or you have bad credit, this is not going to effect the process. However, it is important that you talk to a reverse mortgage provider to find out about the steps that you have to go through in order to get the reverse mortgage that you want.
How You Receive the Money
Many people are wondering how they can get the money from the reverse mortgage. Well, there are several different options that are available to you. Here are just a few of those options.
- Lump Sum – First of all, you are able to get the money in one big lump sum. Some people like the ability to have all the money up front, but this is just one of the available options that you have.
- Credit Line – Another way that you can access the money from the reverse home mortgage is through a special credit line. Basically it allows you to have access to the money whenever you need it, but you don’t have to use any of the money if you don’t need it.
- Monthly Payments – You can also get the money from the reverse mortgage in monthly payments as well. This is an option that many people decide to use, since it allows them to have money each month.
- Combination of Methods – Of course these methods can also be combined together in different ways. Some of the money could be taken up front while the rest of it could be given to you in monthly payments or in a credit line. The options are going to be totally up to you.
Reverse mortgages are explained in more detail at http://www.MinnesotaReverseMortgage.net John Mazzara is involved with financial services in the Twin Cities, MN. Officing out of Edina, Minnesota-John is centrally located within the 7 county MN metropolitan area. John owns three separate businesses-a licensed real estate broker associate selling Minnesota real estate since 1986-affiliated with RE/MAX Associates Plus http://www.MinneapolisStPaulHomes.com, an independent CFP-certified financial planner since 1989 with an independent Minnesota financial planning firm-Financial Planning Associates and the owner of a Minnesota mortgage broker firm-Venture Development Inc-specializing ins residential, commercial and investment mortgages If you are looking for someone to help you in the areas of real estate sales/purchase, mortgages, or and/or financial planning and insurance you should call John for a free 1 hour consultation to see if he can meet your needs. 952-929-2577. RE/MAX Associates Plus and Venture Development are located at 7300 France Ave S, Suite 410, Edina, MN 55435
Photo by Joel Bedford
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