Using A Reverse Mortgage During Retirement
If you look forward to the day when you no longer have to work, starting to plan for retirement as early as possible is important. Without a full-time job, you will not be bringing in a full-time income. You will need to rely on your savings and investment accounts to fund your lifestyle instead.
Capitalizing on the equity you have built in your home with a reverse mortgage can be a simple and effective way to turn your real estate holding into immediate cash. The trick to successfully using a reverse mortgage is to know exactly what you are getting into.
How does a reverse mortgage work?
When you take out a traditional home loan, you secure financing from a lender and make monthly payments on the balance of the loan. A reverse mortgage works exactly as its name implies — in reverse. Instead of sending payments to a lender, you receive payments from a lender instead.
These monthly payments can be utilized to pay for your living expenses should money become tight during retirement. The balance of your reverse mortgage is like a loan, and must be repaid in full when you move out and sell your property.
Who is a good candidate for a reverse mortgage?
Once you understand how a reverse mortgage works, the next step is determining if you are a good candidate to take advantage of the funding a reverse mortgage could provide. Lenders typically take a few major factors into consideration when choosing whether or not to fund a reverse mortgage.
Your age, the amount of money you owe on your home, and the current market value of your property will all be considered. Younger individuals with quite a bit of equity built up make great candidates for reverse mortgages. Your local mortgage lender will be able to help you identify the ways that a reverse mortgage could benefit you throughout your retirement.
Are reverse mortgages safe?
A lender paying you money each month might seem too good to be true. Reverse mortgages might not be a great fit for everyone, but these loan products are considered safe.
In fact, the vast majority of reverse mortgage loans are classified as home equity conversion mortgages and are backed by the United States Department of Housing and Urban Development. This means that a reverse mortgage can be a trustworthy source of income as you plan for your retirement expenses. For more detailed information, contact a company like Senior Mortgage Solutions.