A brief explanation of why one should get a reverse mortgage and how it can be the key to making the golden years golden.
The senior years of life are called the golden years, but for some the years feel more like rusted tin. Retirement planning doesn’t always play out the way it was intended. Illness or some other unplanned catastrophe can come along and wipe out a large chunk of the family nest egg. What’s a senior to do? If you own your own home free and clear, why not get a reverse mortgage?
What is a Reverse Mortgage?
Reverse mortgages allow senior homeowners 62 years of age or older to use the equity in their homes to provide them a supplement income during their retirement years. Payments can be set up on a monthly basis, or as a credit allowance that will allow money for home improvements or other unforeseen expenses from time to time. The amount available for lending is calculated using the homeowner’s age, the home’s appraised value and the current interest rate at the time of the loan.
Reverse Mortgage Repayment
Senior homeowners do not need to repay the reverse mortgage as long as the home is their principal residence. Property taxes, insurance and basic utilities are, of course, still an obligation for the homeowner. But the home can never be taken away as long as these obligations are kept current and at least one of the borrowers resides there. Reselling the home is an excellent way to pay back a reverse mortgage. Another option for repayment would be to use life insurance or estate money.
Quality of Life
The benefits outweigh the negatives for most people. Reverse mortgages give senior citizens a better quality of life along with the ability to stay in the home they’ve worked so hard to maintain all their lives. Social Security and retirements funds may not be enough to live on. It’s nice to know that your home can be the answer to making the golden years golden after all.
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