A Reverse Mortgage
gives you the opportunity to convert your home equity into cash. In the most
basic terms the reverse mortgage allows you to take out a loan against the
equity in your home, but you don't have to repay the loan during your lifetime
as long as you are living in the home and have not sold it. If you like most
people want to increase your retirement funds without loan payments a reverse
is your go to.
What’s the catch? How does it work?
With a reverse mortgage, a lender of your choosing makes
payments to you based on a percentage of the value in your home. When you
choose to move out, the lender will sell your home in order to gain back the
money that was loaned out to you. The lender does have the right to request
back their funds if you do not maintain your property, fail to keep your
property insured, declare bankruptcy, and abandon the property.
Let’s Now talk about HECM
HECM is federally-insured
home equity conversion mortgage. These are provided by the U.S. Department of
housing and Urban Development (HUD). HECM’s limit the costs to borrowers and guarantee
the lenders meet the obligations. With this being the most commonly used one
there is one big drawback. Private lenders you have more flexibility with loan
amounts, under HECM you are limited on the loan amount.
There are pros and cons to both private lenders and HECM.
Like we have advised before, really do your research and pick what best suites
you. We do think that a Reverse Mortgage is something great for people 62 and
over to utilize.
The more tools in your tool belt the better you can build
the rest of your life.
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