Recently reverse mortgages have become more popular and more readily available. To get a reverse mortgage you must be over the age of 62. Mortgage loan providers who provide this type of mortgages aim their ads at seniors who have built up equity in their homes. You may need to be aware about reverse mortgages pros and cons.
The way that a reverse mortgage works is that the lender will make payments to you, instead of the traditional way that a mortgage works with you making payments to the lender. Taxes and interest amounts are included in the amount to be repaid. The way that the lender gets repaid is after the home owner dies or when the house has a new buyer.
Many of these mortgage loans do not have to be repaid for a quite a long time. The way that the lender determines how much money you will be paid is through a system of figuring out what your home is worth, how much equity the home has, your age and the reverse mortgage rates at the time.
You have some options on how to be paid. You may choose a lump sum, monthly payments, or as a line of credit you can use when needed. You may also choose to combine monthly payments and a line of credit.
When deciding on whether or not to consider a reverse mortgage be aware that there are some cons to this type of mortgage. There can be large fees, so be sure you understand them and shop around for the lowest fees. You can find a reverse mortgage calculator online to help you with this. Having an income from a reverse mortgage could also effect your government benefits such as social security or medicaid. When you pass away if you have not repaid your lender, your house will go to them.
A reverse mortgage can be a great idea for certain people in certain situations. Hopefully you can make an informed decision and decide if it is a good option for you.