You can gain many advantages by taking a Reverse Mortgage, but you need to understand how it works in rder to determine if it is the right option for you.
What is a Reverse Mortgage?
A Reverse Mortgage is a unique loan program specifically designed to assist in improving retirement income and monthly cash flow for those age 62 or better. It allows the borrower to utilize home equity to help support their retirement by adding an additional income resource beyond social security and other retirement assets such as a 401(k). The primary residence is the single biggest asset for most seniors. Tapping into the equity in that residence can help your money go further in retirement.
The Main Advantage of a Reverse Mortgage
The main advantage of a Reverse Mortgage is the elimination of monthly mortgage payments. Whether you have an existing mortgage loan or your home is paid in full, the funds you access from a Reverse Mortgage are tax-free and require no monthly mortgage payment. Keep in mind, your responsibility is to:
- Occupy the home as a primary residence
- Keep up with ordinary maintenance
- Pay ongoing property taxes, homeowner’s insurance and homeowner’s association dues (if applicable)
How and When Do I Have to Pay for the Reverse Mortgage?
You are responsible to repay your Reverse Mortgage when your home is sold or refinanced. If you (the borrower) should pass and your heirs are settling the estate, the loan needs to be repaid, but the beneficiaries will not inherit any debt obligations.
To find out more about how a Reverse Mortgage can improve your retirement or to clarify how a Reverse Mortgage works, please contact us anytime.