Reverse Mortgage
ome and go, and it seems that banks are
constantly offering new ways to lure potential borrowers to
sign a little more of their lives away. One of these is the
reverse mortgage.
As the name suggests, a reverse mortgage is a mortgage — in
reverse. With a reverse mortgage, you receive payments rather
than making them. Essentially, you are increasing your debt,
rather than reducing it.
This new system of creating cash flow is generally offered to
homeowners who are over 62 years of age. Stipulations include
that there is enough equity in the property to substantiate the
reverse mortgage amount, and that the homeowner actually resides
in the home that will be mortgaged.
With a reverse mortgage, the homeowner receives regular
payments and builds debt. This can offer retired persons a
valuable source of additional income. The reverse mortgage
“loan” (accumulated debt) must be paid when the borrower stops
living in the home. Should the homeowner sell the property,
move to another residence or pass away, the reverse mortgage
debt will be due and must be paid.
Reverse mortgages really can be a financial boon to older
homeowners. By parting with some of the equity in their home,
the homeowners are able to generate valuable income through the
reverse mortgage payments. The cash is theirs to use however
it’s needed — for home improvements, as a supplemental
retirement income, to cover health care expenses or even to pay
off another mortgage. Also, reverse mortgage payments are
generally considered to be tax-free income. Moreover, once the
reverse mortgage is partly or fully paid off, the interest
portion of the loan may qualify for additional income tax
deductions, adding further benefit to this type of plan.
It’s important to understand all of the details, and check to
see if there are fees and other expenses related to a reverse
mortgage before you commit to one. Shop around and compare the
reverse mortgage plans being offered by various mortgage
lenders. You will be able to select the reverse mortgage that
offers the best returns. Remember too, that you are not
signing over title to your property, and all property taxes,
insurance and related home expenses remain your sole
responsibility.
In this life, nothing is free. However, a reverse mortgage can
be a great option for older homeowners who have built equity in
their properties. While the money will eventually have to be
paid back, it can put a little more gold into how you live your
golden years.
About The Author: Michael Brown writes for several Internet
magazines, most recently http://volal.com and http://piluf.com
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