When you are getting old and already on the brink of retirement, you begin to worry much about living in a time of uncertainty. When you reach the age of 62 and become a senior citizen, you start to think of ways on how you’ll get to earn money without the help of a regular job.
For many of the elderly citizens, a reverse mortgage is the right approach for them to have a fixed income even after retirement. Instead of engaging themselves in a conventional type of loan where they will make monthly payments to cover for the money they’ve borrowed, a reverse mortgage gives an opportunity for the elders to get money against the value of their already paid up homes.
For example, let’s say your home is worth around $200,000. You decide to get a reverse mortgage out of your home’s equity. The value of your house will then be converted to cash, thus giving you an opportunity to increase your spending even if you’re already retired. Let’s say you’ve chosen to be paid $300 a month, then that will continue on as long as you stay in your home, and for as long as you live.
Also, the amount that you get is tax-free since it is considered a loan. You do not have to worry about your Social Security and medical benefits from getting affected.
When you leave your home and transfer to another place, or when the time comes that you die, then that is when the loan will be due. With a reverse mortgage, you will never owe more than what your house is worth, even if the lender has already paid you more than the value of the house. This is particularly advantageous when the value of the house has already declined and was sold to a lesser price.
There are actually no income qualifications to get a reverse mortgage. Do not fret too much if you had a bad credit history when you were still working. That definitely does not count. As long as you are 62 years of age and you own a home, then you’re easily qualified to have a reverse mortgage.
What’s also fascinating is the fact that there’s no restriction on how you will spend your money. Once you get it, you can splurge on anything that will make you happy and satisfied during old age. Travel to famous places, have regular medical check-ups, pay for your house’s maintenance – you name it. You can do whatever you want with your money.
Perhaps the most important advantage is that there’s no risk of default in a reverse mortgage. You will not lose your home in cases of non-payment. Also, if your lender defaults, you’ll still receive your payments. The Department of Housing and Urban Affairs makes sure that your reverse mortgage is federally insured.
Does that sound too good to be true? Yes it is, but if you really think about it, reverse mortgages are a practical option to consider once you enter retirement. It is the perfect opportunity to live a fruitful life while it lasts.