If you’re like a lot of people, you may be wondering if a reverse mortgage is ideal for you. While there’s no one-size-fits-all answer to that question, it’s important to first understand what a reverse mortgage is.
What is a reverse mortgage?
A reverse mortgage is a loan that allows homeowners over the age of 62 to borrow money against the value of their home. It can be a great option for those looking to access some of the equity they have built up in their home, without having to sell it.
It can be a helpful financial tool for seniors who want to supplement their income, cover unexpected costs, or pay off their mortgage sooner.
In this post, we’ll break down five reasons a reverse mortgage could benefit you – so you can decide if it’s the right option for you.
Keep reading to learn more!
It gives you financial flexibility for retirement
When people retire, they often find themselves in situations where money is tight but there’s still an essential need to maintain some level of living comfortably. Many homeowners have found success in taking out loans from their homes as opposed to getting social security payments or relying on their spouse’s income.
With expenses such as healthcare and day-to-day living costs continuing to rise, while income levels remain stagnant or decline; getting a reverse mortgage allows you to afford these necessities much easier over time. This is because you can use your home equity to supplement your income.
You can use the money from the loan for any purpose, including paying off debts, making home improvements, or covering living expenses.
With a steady stream of income coming through, seniors are able to cover their expenses in retirement. So if you want more financial flexibility and to improve your overall quality of life, you should consider getting a reverse mortgage.
You can stay in your home as long as you want
If you’re struggling to make ends meet, a reverse mortgage could give you the freedom to stay in your home and not have to worry about making monthly mortgage payments.
With a reverse mortgage, you can choose to receive a lump sum of cash, a line of credit, or monthly payments. This extra cash can help you cover your living expenses and allow you to stay in your home longer.
You don’t have to pay taxes on the income
One of the key benefits of a reverse mortgage is that you don’t have to pay taxes on the income you receive from the loan. This is because the IRS considers the money as “loan proceeds” as opposed to an income you earned. Subsequently, the money you receive from the reverse mortgage will have zero impact on your Social Security or Medicare benefits. This can be a big help if you’re retired and living on a fixed income.
You’re protected if the balance goes over your home’s value
If you’re worried about taking out a reverse mortgage because you think your home’s value could drop and leave you owing money, don’t be.
Contrary to a traditional mortgage, there are no monthly payments required. So, if the value of your home decreases and your reverse mortgage loan balance increases, you don’t have to worry about failing to pay the loan. The lender won’t be able to pursue any assets other than your home to satisfy the debt.
With a reverse mortgage, you’re protected from having to pay back more than the value of your home. So if you sell your home to pay off a reverse mortgage, the lender will cover the difference between the sale price and the amount you owe.
There are no monthly mortgage payments
A reverse mortgage, unlike a traditional mortgage, does not require monthly payments because the lender pays them. The borrower does not need to make monthly payments until the borrower dies, sells the home, or permanently moves out of the home.
As long as you live in the home and don’t breach the terms of the reverse mortgage agreement, you don’t have to make any payments on the loan until it comes due.
This can be a helpful option for seniors who are no longer able to work or don’t have enough income to cover their monthly expenses.
Contact 1st Eagle Mortgage to get a reverse mortgage today
Reverse mortgages are one of our specialties at 1st Eagle Mortgage. We have decades of experience in the mortgage sector and have the expertise to guide you through this process.No comments yet