And now…a word from our dope sponsor!
Let me say this: I am getting old. I feel more connected to the “old school” part of my blog. I have been thinking about house-buying, and retirement. What the hell is happening to me?
Anyway, here’s some sound advise on reverse mortgages. Maybe I will try one. Savings is good!
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Pad Your Retirement with a Reverse Mortgage
When you hear the word “retirement,” you think of it as a time to live your dream life and fulfil your fantasies. You think of more happy things to do, who to be with, and where to go. It’s a time when you have to focus on what matters the most. However, without money, you can’t live a comfortable post-retirement lifestyle. But don’t feel down if you are at that stage of your life and without any income stream. The solution is to take a reverse mortgage on your home; this is not the traditional loan that leaves you popping pills at night to meet up with stringent deadlines.
What Makes a Reverse Mortgage Different from Standard Loans?
With the standard mortgage, also known as a short-term loan, you have to make monthly repayments to meet the loan condition. Failure to do so can jeopardize your credit or even lead to a foreclosure on your home. Besides, during retirement, a retiree’s income tends to dip. So, how can you cope with a monthly instalment of $3,000 when you currently make $1,000 or less? For this reason, most retirees who choose this path end up in pretty bad shape.
On the other hand, a reverse mortgage offers you enough financial flexibility to accomplish any goal without making repayments immediately. Hence, your lender puts money in your pocket rather than remove from it.
Types of Reverse Mortgages and Conditions to Apply
Reverse mortgages come in two categories – the private, single-purpose reverse mortgage, and the Home Equity Conversion Mortgages (HECMs). Private lenders provide the first mortgage to homeowners, an example being Wells Fargo. In contrast, government agencies, such as the U.S. Department of Housing and Urban Development, offer HECMs.
Speaking of government-insured Home Equity Conversion Mortgages (HECMs), there are specific rules you have to abide by as a borrower. They include the following:
• You can’t borrow more than your home equity.
• If the lender shuts down their operation, you will still receive your funds.
• You can include other co-borrowers who will enjoy similar benefits and protection.
You can also take advantage of one outstanding reverse mortgage known as the HECM for Purchase. With this loan, you can take a reverse mortgage and acquire a new home at once.
However, to apply for a reverse loan, you have to be at least 62 years old. Hence, some people consider it to be a retirement loan.
Additionally, your home must be your primary and permanent residence. The amount you can borrow depends on your age, existing mortgage, current home value, and interest rates. You can’t use your home as a vacation spot for tourists or a rental apartment. And if you have a multi-unit apartment, then one of them must serve as your primary, permanent home.
Types of Reverse Mortgages and Conditions to Apply
If you are eligible for a reverse mortgage, you can set up your payment through any or a combination of these means: as a line of credit, as small monthly payments, or as a lump sum. Your current situation or goals will determine your ideal option. However, be sure that you need a loan before contacting a lender.