Reverse Mortgages – Use the equity in your home to retire in style

A reverse mortgage is a special type of home financing for a person aged 62 and over. This allows a person to pull money out of their home without having to make payments on the line of credit or the lump sum they receive. With this type of program, there is no payment or repayment of the loan and the money can be spread out in a lump sum to provide a steady income for life, or it can be used as a line of credit as needed. Depending on the homeowner’s situation, these options can also be combined.

Your life situation does not have to be financially depressed to take advantage of this type of loan. You may only want to pay off an existing loan balance and not make any further payments. Freeing up the equity in your home can improve your quality of life. The money can be used to take vacations, pay medical bills, send a grandchild to college, or simply supplement retirement income. You’ve worked hard to build the equity in your home, why not enjoy it now!

Unlike a traditional loan, there are no credit standards or income requirements. The two most important factors are your age and the value of your home. The reverse mortgage process usually takes about 30 days before you receive your money.

When you use this type of program, ownership of the property remains in your name, you do not transfer ownership of the property. If at some point you decide to sell your house and move to another apartment, you can do that. What goes to the bank would be the closing costs, the amount borrowed, and the daily interest charged on the loan. The remaining equity in the house is all yours. Another frequently asked question is, are there any negative tax implications for using a reverse mortgage? The answer is that it is just like any other type of refinance and is not taxable income.

If your heirs get your house, they will either have to refinance the house if they want to keep it, or they will have to sell it. You get the remaining equity of the home, which would be the difference between the principal borrowed, accrued interest, closing costs, and commissions.

One of the safeguards the federal government has put in place to ensure the consumer understands exactly how this type of product works is the requirement that you attend a HUD-approved counseling session. This can be done over the phone and there are various agencies that can provide you with this service free of charge. After completing the counseling session, you will receive a certificate in the mail stating that you meet the federal government’s requirements to be counseled by an independent third party.

In conclusion, if you’re looking to use the equity in your home to enjoy your golden years more thoroughly, figuring out how much a reverse mortgage can benefit you is a fairly simple process. All you need to know is the approximate value of your home and its age, and you can explore all different types of products with a range of options.