Reverse Mortgages, Explained
You have been planning for your retirement and you think that you will be able to maintain a comfortable living with all of the savings and investments that you have acquired before your retirement.
But what can you do if you have miscalculated? Or you or your spouse need long-term medical care? Or the cost of living increases?
What if you live longer than what you had planned on and your retirement accounts are going down at a fast rate?
You’ve heard about reverse mortgages but what exactly are they?
What is a Reverse Mortgage?
One way to supplement retirement income is to consider taking a reverse mortgage out on your home, Quicken Loans explains.
The loan will not come due until the last borrower moves out of the residence or passes away.
When this occurs, the home is sold, and the revenues of the sale are used to pay the loan balance in full.
A reverse mortgage is a nonrecourse loan, which means the home sells for less than what owed, you or your heirs will not be responsible for paying the difference.
There are several types of reverse mortgage loans and usually, the FHA or the lender will cover or absorb the difference.
If your home sells for more than what is owed on the loan, you or your heirs will get the remaining money.
How do I know if I meet the requirements?
You can go to a Department of Housing and Urban Development (HUD) approved advisor to learn about the options and different loans that are available to you.
You will go through an assessment to make sure you are in the best position to be successful with your loan.
There are many types of reverse mortgage loans available to you and you need to proceed with caution as there are many scam loans out there as well.
It is best to do your research on the lender you are considering as well as getting all of the information regarding the loan terms and conditions.
Although it could be a lot of work on your end initially, it could have a much bigger payoff for you and your future.
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