What is a Reverse Mortgage?
Banks are happy to lend you money against your home, not ask for any payments and collect only when you die or move from your house. What a deal!
Reverse mortgages can be a fantastic way for seniors (must be age 62+) with home equity to use that equity to increase income. The equity in your home is like a bank account paying you zero interest. Why not use that asset to live more comfortably? Would you ever leave money in a bank account at 0% interest?
Many seniors may want to leave their home to heirs. But if in fact they need income, why not live a better life and turn that home equity into income? Because no payments are made to the bank on reverse mortgages, the senior homeowner gets a lump sum or monthly payments without ever needing to worry about making repayments. Payments will be due only if the borrower moves from the house or dies. Let the kids make their own money.
With trillions of dollars in the home equity of seniors, this is a great source of potential retirement income. And while less than 500,000 reverse mortgage loans have been made nationwide, this source of retirement income is growing fast and maybe one source of retirement income that saves many baby boomers.
For some odd reason, people have some fear of reverse mortgages and this is simply illogical for the following reasons:
1. You get the bank's money, they don't get your money so they should be the party that has fear of getting paid back
2. You cannot have your house suddenly taken away form you. There is a contract and everything is spelled out clearly. If you fear you wont understand it, then get a lawyer to explain it to you. The bank gets possession of your house if you die, move out or fail to pay property taxes.
As the reverse mortgage market evolves, we keep information up-to-date. More on reverse mortgages