Reverse mortgage, which can be confusing for those who are not familiar with it, is a type of mortgage loan where the lender makes payments to the homeowner, rather than the homeowner making monthly payments to the lender. This is different from a traditional mortgage, where the homeowner makes payments until the principal loan amount is paid in full.
To qualify, a homeowner must be 62 years or older, own the home they want the reverse loan for, or have significant equity in it. The home must also be the primary residence, which means the homeowner must live there for at least six months a year. Click here for the full list of requirements.
Many people near retirement age do not have enough income to live comfortably, and a reverse mortgage can help them turn a portion of their home equity into tax-free cash. This money can be used for various purposes, such as extending or taking an early retirement, consolidating debt, making home improvements, or creating an emergency fund. While many reverse mortgage candidates have already paid off their homes, some have not, and a reverse mortgage can help eliminate their monthly mortgage payment while still allowing them to access any leftover home equity.
While there are numerous benefits to getting a reverse mortgage, it may not be suitable for everyone who is eligible. Ultimately, you will want to speak with a certified Mortgage Planner to find out if a Reverse Mortgage is right for you.