At some points, you would have to retire. This is an unavoidable aspect of life. What is more important is the level of preparation you have taken to ensure that you have an amazing retirement lifestyle. Sadly, for many individuals, this is nothing but a fairytale as increasing living cost and longer life expectancy makes it challenging to live the dream.
With the increasing number of fishy adverts claiming to provide mouth-watering financial plans for retirees, it becomes difficult to find the ideal means to generate funds. So where do we go from here? For some individuals, a reverse mortgage might just be the golden ticket they need to secure financial freedom. What does this term mean and how does it work? Let’s take a dive into the world of reverse mortgages.
What Is A Reverse Mortgage
A reverse mortgage is a mortgage loan that is secured by an individual’s residential property and allows such a person to access an unrestrained portion of their home equity which can be converted into money – provide that the individual is over the age of 62.
You can supplement your retirement fund using this type of loan. However, whereby you have an existing loan, it is advised that you pay it off with your proceeds. By doing so, you will get rid of the required monthly mortgage payment.
Several people consider reverse mortgages based on various personal needs. They may be in dire need of cash or want to expand their financial base to accommodate more expenses. Here are some reasons why one would take a reverse mortgage:
- Debt consolidation.
- Pay off or reduce monthly mortgage payments, saving more money monthly.
- Make payments for in-home care.
- Acquire a new home.
- To boost income and expand the number of acquired assets.
- Set aside emergency funds.
- Access a portion of one’s home net worth.
The proceeds generated from a reverse mortgage can in various following ways:
- Monthly term payments
- Monthly tenure payments
- Line of credit
- Customized payment option
What Qualifies You For A Reverse Home Mortgage?
For your reverse home mortgage application to be approved, you must at least meet these requirements:
- The applicant must be 62years or older.
- There must be equity of 50% or more in your home; although, the percentage varies from one lender to another.
- Counselling sessions are mandatory. These sessions are arranged by a counsellor from the Department of Housing and Urban Development and you get enlightened on various aspects of the loan and your options.
- You must be assessed financially to ascertain that you can handle the loan properly.
- Apart from you qualifying for the loan, your home must be eligible for the loan. How can your home qualify for the loan?
- It must be your primary residence.
- Your home must be intact and meet FHA standards.
- It must not be a mobile or manufactured home.
- If the home is a condo, it must be HUD/FHA approved. Whereby it is not approved, you still get to qualify for a reverse home mortgage.
f you would like to apply for a reverse home mortgage, please visit this site The Reverse Mortgage.