If you’re among the elderly population and you’re a homeowner, reverse mortgages are available to you. You may have heard about them before, but thought, how does a reverse mortgage work? Well, the basic principal of a reverse mortgage is to collect money from the lender based upon your equity, instead of you having to make monthly installments. This could offer financial help for you.
Sounds great, right? Well there are some drawbacks to this seemingly advantageous system. First of all if you’re currently receiving any type of government assistance, such as social security or Medicare, they could reevaluate your qualification because of this type of income. Also, after you make the deal with the lender, they will receive ownership of your home after you pass away if all the repayments haven’t taken place.
Furthermore, be prepared for the fees that are involved by shopping around and getting the best rate available to you. You can do this by getting quotes or using reverse mortgage calculator.
But how does a reverse mortgage work to benefit you? There are some good points about this opportunity too. Some of them don’t need to be repaid if anything, first of all. Also, if you have a good bit of equity built up in your home then you will most likely be eligible for a nice payout with a decent rate. In addition, you have choices when it comes to how you receive the money. It can be put into a line of credit you can dip into, or given in a lump sum.
There are also options regarding monthly payments, because you can get them for a certain length of time or for the rest of your life. Once you weigh the pros and cons, you should be able to make a great decision whether or not it’s the best thing for you.