As people get older, they might come upon tough financial times. Especially if they don’t have much stored away in savings. People who have taken the most prudent steps to ensure a comfortable retirement are usually in the minority. Most retirees underestimated how much they would need for retirement & have to look for other means of income.
Because of the high cost of living, a lot of retirees have to go back to work to cover unexpected expenses. They get a new job (sometimes an entry level job) just to pay the bills. Gone are the days when social security is enough to live on. A reverse mortgage is a great option for anyone who finds themselves in this predicament. Why would someone considering retirment consider something like a reverse mortgage – which will actually put them into more debt? Let’s analyze a reverse mortgage a little closer.
A reverse mortgage is basically the opposite of a traditional forward mortgage. When you initially purchase a home, you put down a small payment and then finance the rest. Eventually, you’ve paid the principal down & you own the home outright. With a reverse mortgage, the bank actually pays you for the house and you owe the entire balance at the end of the term.
The advantage of a reverse mortgage is pretty obvious. You get to live in the house that you’ve been living in for quite some time and the bank makes a monthly payment to you until you’ve maxed out your loan. This can be really helpful because it is able to a passive source of income with very little work other than filling out some forms.
This type of loan is only available for people older than 62 and only for those who have a good deal of equity in the house. They’ll need to own the home free and clear of any liens. You don’t need income to qualify for a reverse mortgage. The lender isn’t concerned about how much you make because you aren’t required to make monthly payments. The house guarantees that they will get their money back in the end. The bank (or lender) doesn’t have to worry about the value of the home because it is FHA insured.
The largest drawback to a reverse mortgage is that you can’t pass on a home that you own free & clear to your heirs, but as they say – “you can’t put a trailer hitch on your coffin anyway”. This may or may not be important to those involved, but it should be a consideration.
Under the right conditions, a reverse mortgage can be a fantastic tool. Before making any final decisions, be sure to talk about it with your family – especially those who you plan on leaving your estate to. Be sure to play with the numbers and check with your mortgage broker. Just make sure to crunch the numbers, and run them by a loved one and financial advisor before making any final decisions.
If you ever consider buying real estate in Castle Rock, Colorado, check out Automated Homefinder – your real estate experts in Colorado.
911 Foreclosure,
Your webinar was very informative and really opened my eyes to the modification process. I'd love to see it available for download! Thanks for the lesson in modification.
