What is it
A reverse mortgage is essentially what it sounds like. It takes your home equity and converts it into money in monthly payments or a lump sum.
Are you qualified
There are several requirements you need to meet to apply for a reverse mortgage. The minimum age requirement for a reverse mortgage is 62. The older you are the higher the loan amount can be. You also must own your home and meet a minimum equity requirement.
The equity of your home is there for you to use
A reverse mortgage allows a retired homeowner to remain in a home without mortgage payments. Imagine that you’re incapable of paying your monthly or yearly mortgage payments, or that you’re just in need of money. This sometimes happens when a homeowner retires and can’t pay the mortgage due to the loss of income and potentially higher living and medical expenses. In these cases, you can call on a reverse mortgage for aid.
Pros and Cons of reverse mortgages
Most seniors would also prefer to stay in their homes for the rest of their lives. With a house being the largest asset most seniors have, it can be a great way to get money while still being in possession of your house. Some downsides of reverse mortgages would be the fees involved to get one. These costs can sometimes be high but are included in the loan rather than paid up front. Reverse mortgages also decrease your home’s equity and leaves less equity for your heirs.