A Comprehensive Review of Reverse Mortgages

You may be decades away or a couple of days away from retirement and maybe thinking of what to do about the next phase of your life. Most retirees find themselves in this position. Of course, money doesn’t necessarily bring happiness, but at the same time, it meets several needs. Even though it may not be your priority and want to live a simple and happy life, you still need money to eat breakfast! So, what do you do? How do you cope? Do you want to live a happy and wealthy post-retirement lifestyle, or do you want to live from hand to mouth? If you are worried about what the future holds for you after tendering your resignation letter, then you’ve come to the right spot. This guide will show you everything you should know about increasing your finances using one powerful tool known as reverse mortgages or home equity conversion mortgages, where you borrow against your house.


A Comprehensive Review of Reverse Mortgages



Your Home is Your Asset


You may have heard of the catchphrase, “Your home is a liability.” This statement is true, especially if it takes more away from you and gives no financial value in return – and that’s what the traditional home loans do as well. However, your home can be a great asset if it puts money in your wallet. “But I am not a property guru.” you may say. You don’t have to be vast in real estate or own a property portfolio to earn from your home equity. All you need is a reverse mortgage. With this type of loan, you can make money on your home value and still retain ownership.


It gets better; you don’t have to repay immediately, unlike the traditional home loan. You can defer repayments to a later time. As a result, it is difficult for borrowers to default on this loan. Having spare cash implies that you get to pursue your goals and fulfil them without duress. Your lender will not be coming after you anytime soon, depending on the loan term.


So, if you decide to hold on until 20 years, then that becomes your loan term. But it’s not all rainbows and sunshine. Here is the catch: the more you wait, the more the interest accumulates. So, it is essential to treat this loan with caution. Don’t take more than you can payback.



Types of Reverse Mortgages and Homes Involved


A reverse mortgage is of two types – the private, single-purpose reverse mortgage issued by private lenders and the Home Equity Conversion Mortgage (HECM).  And if those are not enough, there is the HECM for purchase. The standard HECM is government-insured and comes with the following rules:


  • You can’t borrow more than your home value
  • Even if the business shuts down, you will receive your loan
  • You can sign up more people as titleholders who will benefit from certain protection


With the HECM for purchase, you can process a reverse mortgage and acquire a new home from the funds.


A Comprehensive Review of Reverse Mortgages


There is More to Know


Before you qualify for a reverse mortgage, you have to be at least 62 years or older and live in your home primarily and permanently. If you have a multi-unit apartment, then one of them must be your primary, permanent residence. Your lender will determine if your home qualifies for a reverse mortgage with the help of a reverse mortgage calculator tool. They will consider the following:


  • The age of your home
  • Its location
  • Its condition


With these factors, it is easy to determine its worth and the available amount you can access. Once cleared, you can set up your payment through any or two or all of the following means – as a credit line, as a lump sum payment, and as a monthly payment plan.



A Comprehensive Review of Reverse Mortgages


This is a collaboration with All Reverse Mortgages


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