Just What Is A Reverse Mortgage?
BY Copyright %26copy2007 Carl DiNello
It's very common today to find many retired people having difficult financial times trying to live on a small pension, or on an even smaller Social Security Check. Trying to keep up with their bills can seem like a losing battle.
Many are still paying off their mortgage, and possibly a home equity loan they may have taken out for major repairs to the home, or even to cover educational expenses for their children. Add to that any medical care, or prescriptions needed, along with the rising cost of living, and it's not surprising to find them deep in the red and falling further behind every month.
When in this situation the idea of selling the house and moving to a smaller condo, or even a retirement community, can be very appealing. However, there are a great many people who feel "This is our house and this is where we're staying!"
How can this problem be solved for those who choose not to leave the home they have lived in most of their lives?
A reverse mortgage may be the answer.
You are not alone if you are not familiar with a reverse mortgage. This type of mortgage is not designed for the average person, but may be a solution for those who choose not to leave their home during the later years of their lives.
The reverse mortgage is designed to help older homeowners who are struggling with low incomes while trying to stay in the house they have lived in for years.
The reverse mortgage does just what it's name implies - it works in reverse. A homeowner (or homeowners), is allowed to receive cash, most commonly, for a portion of the equity in their home provided that the homeowner, or homeowners are age 62 or older.
Some Highlights Of A Reverse Mortgage
* No income or credit qualification is required
* The homeowner, or homeowners will no longer be required to make a monthly mortgage payment
* The homeowner, or homeowners can receive tax-free monthly income, a lump sum cash payment, a line of credit, or any combination of these
* The homeowner, or homeowners keep the title to their home, and are allowed to remain in their home
So, when and how does the money from the reverse mortgage get paid back? No matter how long you live in your home, the money does not have to be paid back until you sell the house, permanently move out of the house, or die.
The amount you will be allowed to borrow will depend on your age, the value of your home, your current equity in the home, and current interest rates.
So, what's the downside? The homeowner, or homeowners will no longer have the equity in the house as they once did. This can be troublesome to those who may be uncomfortable with the fact that the home they had intended to leave to the children might not now be possible.
A reverse mortgage should be discussed with your lawyer, banker, accountant, or other professional who can help with this decision.
ABOUTH THE AUTHORCarl DiNello is an Article Author and Wesbite Owner whose articles are featured on websites covering the Internets most popular topics.
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