Are You Eligible For A Reverse Mortgage?
There is no-one who doesn’t look forward to the freedom that retirement brings, but what you gain in freedom, you often lose in disposable income at the end of your career. If you retire without a backup plan, you will find yourself faced with an array of financial concerns upon your retirement. However, if you are in the fortunate position of owning your own home by the time you retire, you could definitely find some form of relief in the form of a reverse mortgage. This can offer a much less stressful alternative to a traditional personal loan, and is know for being a lot more flexible. Sound appealing? Here’s how it works.
What exactly is it?
If you think about the consequences of taking out a loan, or worse – defaulting on your loan, you will no doubt think about how it could negatively affect your credit rating, or at worst lead to foreclosure. One of the greatest benefits of a reverse mortgage is that it can provide financial relief without putting you into a debt trap for years to come. You will not be expected to pay back any of the money before the end of your loan period, making it a solid and stable alternative to a traditional loan. However, you should be aware of certain restrictions around the issuing of one of these loans.
If you are younger than 62 years of age, you will unfortunately not be eligible to apply for a reverse home loan. Additionally, the home that you use as collateral for the loan should be your own, legal, long-term and permanent residence. You should also be aware of the fact that you will not be able to access the full value of your home in the form of a loan. This is not because your lender is trying to be funny – there are federal laws in place that prevent overlending, and this is one of the federal restrictions around reverse mortgages. Your lender will take aspects such as the age and location of your home, as well as its overall condition into account, to calculate the percentage value that you would be able to borrow. This calculation is made using a reverse mortgage calculator, which makes the decision automatic and impartial.
How do I access my money?
Upon qualifying for a reverse mortgage, you can take ownership of your money in one of a few ways. You could choose a monthly payment, where portions of the overall amount are paid out to you episodically on a monthly basis, in a similar fashion to receiving a monthly salary. The second option is a line of credit, where you access the amount you need when you need it; or finally, a lump sum bulk payment, where all funds are transferred to you in one go, and after which you have no further claims to the amount that was granted. Whichever option you choose, you can be sure of financial relief during your retirement with a reverse home loan.