Smart Quiz: How Can Homeowners Cash Out Monthly Without Ever Selling or Going Into Debt?
Answer: Reverse Mortgage
a. Home Refinancing
b. Reverse Mortgage
c. Loan Extension
d. Payment Forgiveness
Answer: Reverse Mortgage
Finances don’t always work out as planned. In spite of your best planning, sometimes there’s too much month left at the end of the money. A reverse mortgage can mean some extra cash, an upgrade of quality of living, or a nice buffer between the homeowner and the monthly bills. It can even be the method of choice for those who want to avoid passing the home along to ungrateful heirs. For seniors who need a bit of extra cash, but have limited options, a reverse mortgage can be the perfect financial break.
A reverse mortgage is an equity loan for senior homeowners, paid out on a monthly basis. For those who have their homes paid off or close to being paid off, it can be like doubling the benefits of all the hard work they put into being a homeowner.
Not everyone will qualify for a reverse mortgage. Anyone under 62 years of age, those who have just begun to pay off their mortgage, and mortgages on rental properties do not meet reverse mortgage qualifications.
If it’s used correctly, a reverse mortgage can help delay Social Security and pension payouts, giving retirement assets time to grow, and increasing cash flow by eliminating monthly mortgage payments.
According to Reverse.org, to qualify for reverse mortgage loan, the applicant must meet these basic requirements:
- The youngest borrower on the title must be at least 62 years old
- The home must be their primary residence
- The borrowers must have sufficient home equity
- The borrowers must meet HUD (Department of Housing and Urban Development) financial eligibility criteria
The Federal Housing Administration (FHA) calculates the amount of home equity the borrower can access. The factors used to determine the how much can be accessed is:
- Age of youngest homeowner
- Current value of the property
- Balance on existing mortgage loans
- Interest rates
If you plan on staying in your home, reverse mortgages can be just the strategic tool needed to help put the right retirement plan in place, give a current retirement plan room to grow, or just offset some monthly expenses.
When weighing all the options, consider the potential a reverse mortgage might have to be the buffer between financial strain and the breathing room that makes for a pleasant retirement. Find out if a reverse mortgage is a good fit for you, here.
~Here’s to Your Financial Health!