Hordes of elderly homeowners are seeking ways to put money back in their pockets during their "Golden Years." Retirement funds and Social Security have not provided sufficient means for some elderly homeowners and they are now looking for other ways to supplement their income. One way that is steadily on the rise in popularity among the elderly is the reverse mortgage. Avoiding foreclosure and other financial hang-ups are just a few of the reasons reverse mortgages appeal to the elderly. Below we will answer a few of questions about reverse mortgage.
What is a reverse mortgage?
According to reversemortgage.org, "A reverse mortgage enables older homeowners (62+) to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment." With a reverse mortgage, the homeowner receives payments from the lender instead of making payments to the lender like in a regular mortgage. Whenever the home is sold, the lender recovers the principle plus interest. According to hud.gov, "the size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value."
Why does it appeal to the elderly?
The reverse mortgage appeals to the elderly (62+) for a few different reasons. The money can be used to supplement retirement income, pay for health care costs, remodel a kitchen or bathroom, or take a "dream vacation." Also, a reverse mortgage is like a reward for your age, the older you are and the more valuable your home, the more money you are able to get.
What are the requirements?
The requirements for a reverse mortgage are advantageous to seniors. There is no income or medical requirements to meet when qualifying for the reverse mortgage. As long as you are at least 62 or in the case of couples, the youngest spouse is 62, have enough equity in your home or own your home, you can qualify for a reverse mortgage.
If you are thinking about a reverse mortgage, speak with a qualified broker and discuss all your options. Being educated and informed on reverse mortgages will make your decision making much easier.
