A popular method of borrowing against your home is the reverse mortgage. The reverse mortgage is becoming increasingly popular among senior citizens who wish to pay off their debts and increase their retirement income. It is expected that as the Baby Boom generation moves towards retirement, use of the reverse mortgage will become more and more frequent.
Reverse mortgages differ from a traditional mortgage in that there are no monthly payments.
The funds can be paid out as a monthly income, taken as a lump sum or withdrawn as needed. Interest is charged each month and deducted from the home equity balance.
The most common reverse mortgage is the federally insured Home Equity Conversion Mortgage. This mortgage guarantees a retiree can remain in his or her home until he or she passes away or moves out. Any remaining equity in the home is the retiree’s or his or her heirs. The lender gets none.
One advantage of reverse mortgages is that your ability to obtain one is not tied to your income. In fact, you can get one without any income at all!
You must, however, repay the loan upon your death or when the home is sold.
Reverse mortgages...
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