What is a Reverse Mortgage?
By Nate Kennedy
Reverse mortgages are designed for senior aged people who are looking for a supplemental income to support themselves during retirement. If you qualify for such a loan, a reverse mortgage loan will allow you to convert the equity you’ve built up in your home into cash.
Under a reverse mortgage, the lender will pay you a lump sum or multiple payments, while you continue to live in the home. Your obligation to repay the loan is deferred until you die, the home is sold, or you leave (e.g. you move into an aged care facility). In this case, you (or your estate) must repay the balance of the reverse mortgage.
To qualify for a reverse mortgage you must own your own home or have a very low mortgage remaining on your home. You must be 62 years of age or older and be the primary resident of the home. There are many different lenders who will approve a reverse mortgage loan if you meet these basic requirements.
In contrast to a traditional home equity loan which requires you to have a stable income, you don’t need any income to qualify for a reverse mortgage. In fact, the very purpose of such mortgages is to assist people who are ‘asset rich’ (in terms of their home) but ‘income poor’ in that they have insufficient or no income.
The amount of money you are eligible to borrow under the terms of a reverse mortgage depends on the equity you have in your home. Your age will make a difference too. Usually, the more equity in your home and the older you are, the lower your interest rate will be and the more money you’ll be able to borrow. Also, another difference between reverse mortgage loans and traditional home loans is that if you don’t meet your repayments you will never be forced to vacate your home.
If you are a senior and your social security benefits are barely meeting your living expenses (if at all) a reverse mortgage on your home is a terrific option. In a very real sense it is a way to benefit from the equity you own in your home. This equity can be virtually converted into monthly payments that can help support your lifestyle. And as long as you continue living in the home, you will never have to pay back the mortgage your home will be used to pay off the loan when you decide to sell or pass away.
If you have the desire to be a successful real estate investor and want to improve your business then make sure you check out more articles and information at http://www.VirtualREIMentor.com
You will learn how to get out of the rat race and start living your life the way you want!
Nate Kennedy http://www.NateKennedy.com
Photo by Katie Jane Moriarty
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