What Is A Reverse Mortgage And Should You Get One?
What Is A Reverse Mortgage And Should You Get One?
Who Qualifies for a Reverse Mortgage?
To qualify for a reverse mortgage, you must meet the following criteria:
Be at least 62 years old.
Own your home with sufficient equity. This means your home's value must exceed the amount you owe on it.
Here’s How It Works
When you initially purchased your home, you borrowed money from a bank and repaid it through monthly mortgage payments. A reverse mortgage operates in the opposite manner. Instead of making payments to the bank, the bank pays you a monthly payment based on the equity in your home.
The loan is repaid when you sell the home, refinance, move out permanently, or upon your death. At that time, you or your heirs must repay the loan amount plus interest in a lump sum.
How Do I Get a Reverse Mortgage?
Reverse mortgages can be obtained through most major banks and lenders. Here’s the process:
Home Appraisal: An appraiser will determine the value of your home.
Qualification Assessment: The lender will calculate how much you qualify for based on your age, home equity, and the cost of the loan.
Choosing Payment Options: Decide how you want to receive the funds:
As a lump sum
In monthly payments
As a credit line, allowing you to draw funds as needed
Sign the Contract: The contract will detail the payment terms and the total amount to be repaid, including interest.
Maintaining Your Reverse Mortgage
To keep your reverse mortgage in good standing, you must:
Pay property taxes on time.
Maintain and repair your home.
Maintain homeowner’s insurance.
