Understanding Reverse Mortgages
Not a lot of people have even heard of reverse mortgages, let alone understand what it is all about. For those who have maybe heard a commercial on the television about reverse mortgages, most know that you have to be older to get it and that you do not have to ever pay it back. Well, there is a little truth in that but not completely as the reverse mortgage does have to be paid back in one way or another. For some, this may be an ideal way to better their current living situation but for others, this could lead to something they really did not want.
Just like anything else, before signing for reverse mortgages it is important to understand exactly how the program works, who it will benefit more, and what your long term plans were with your home and its equity when you pass on. It can be an awful thing to think about, but when considering reverse mortgages, it is important to take everything into consideration. This may be something that you would want a lawyer or even a family member to look over with you, as they may be able to point something out about reverse mortgages that you did not even think of.
How It Works
Reverse mortgages are loans or mortgages against your home that you do not have to repay in monthly installments, for as long as you live there. But the debt is still owed to the company and you are not getting something for nothing when dealing with reverse mortgages. If you have equity in your house, you are able to borrow cash and use it for whatever you see fit. The ways that reverse mortgages can pay out to the borrows are through one lump sum payment of cash, through a cash advance that is spread out over months, and as a credit line sort of account that you can pull money from whenever you feel that you need it.
Now, remember I mentioned you don't get something for nothing? Even though you do not have to make any monthly installments back to the bank while you live in the home, if you ever die, permanently move out, or sell your home, you are required to pay them back the money you borrowed plus some. In most cases, the owners are required to be at least sixty-two years of age or older to be eligible for reverse mortgages. For some people, this is their only chance at taking the equity in their home and living the good life, as a lot of people in their retirement years are not able to afford any more monthly expenses.
