Access to Cash Through Home Equity
With a reverse mortgage, you get access to home equity without selling your home. These funds can offer extra money during retirement to pay off debt, maintain your lifestyle and handle surprise expenses.
No Monthly Mortgage Payments
Like a reverse mortgage, a home equity loan borrows against your home’s equity. But with a home equity loan, you’ll make monthly mortgage payments, which cuts into how much you have left to spend. With a reverse mortgage, you don’t have to make monthly payments. The loan only needs to be repaid when you sell your house, move out or pass away, and it is typically paid for with the money from the sale of your home. You don’t have to pay off the loan balance or interest before then. Borrowers should compare both a forward mortgage, or home equity loan, and a reverse mortgage. The right option depends on the client’s personal situation.
Maintain Ownership of Your Home
You’re still the owner of your home after taking out a reverse mortgage. The lender doesn’t receive the title or the right to sell your house, so long as you keep up with the housing costs, including property taxes and homeowners insurance. The house remains yours until you move out or pass away. Even if you move out, you still have the option to pay off the loan to keep the property.
Flexible Payment Options
There are a range of different ways to borrow through a reverse mortgage, including taking lifetime payments, a lump sum or a line of credit. You may be able to switch to a different payment option during your loan, like converting your line of credit into guaranteed lifetime payments. If you borrow money from a line of credit, you can pay back the money and borrow again later.
With a reverse mortgage, people take their home equity and turn it into a flexible source of money. This gives the borrower more options during retirement. For example, when they need money, they can borrow through their line of credit rather than being forced to sell a stock that’s paying a nice dividend.
Social Security and Medicare UnAffected
When you receive money from a reverse mortgage, it counts as a loan, not as income. As a result, your Social Security and Medicare will not be affected.
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