Are you thinking about getting a reverse mortgage? Their may be many reasons for this such as a supplemental retirement income, to pay for medical bills, or even just because you want the extra money. However their are 3 things you should know before you do get a reverse mortgage.
Do you know how a reverse mortgage works? A reverse mortgage works the exact opposite of traditional mortgage instead of you making a payment to them they will make a payment to you. How this is done is they will assess the total value of your home and once they do this they will set up payment plan that is very similar to an annuity in that they will continually make payments to you until you pass away.
Second, do you have equity in your home? In order to get a reverse mortgage you cannot have a no equity home loan. The reason for this is that in order to pay you every single month your are going to have to have some sort value in your home and if you don’t have this you will not get a loan. On top this you also have to be at least 60 years of age to open a reverse mortgage as well.
Third, how do you plan to pay off the reverse mortgage? While your receiving payments you won’t have to make any payments towards the debt that will be owed but once you pass away the debt will have to be paid. One way to do this by selling the home. However, not all people want this to happen so another way to pay off the debt is by setting up a second to die life insurance policy. This is a policy that will pay out after the second spouse has passed away and can be put towards the home to pay off the loan.
In the end a reverse mortgage is a great way to get additional money in your older years, however before you make a decision contact a reverse mortgage representative to learn how this option could benefit you situation.