People are living longer and longer, which can make it hard to save for retirement. Reverse mortgages can help people who own their own homes not worry about money.
Reverse Mortgages
Reverse mortgages are basically a way to get cash from the value of your home. Even though there are different options, a typical reverse mortgage will give you a lump sum, monthly payments, or a credit line based on the value of your home. The length of the mortgage will be a certain number of years. At the end of the loan's term, you won't have to pay it back. Instead, the bank will own the part of your equity that you used to get the loan.
Only people over the age of 62 can get a reverse mortgage. Everyone whose name is on the home's deed must be at least 62 years old. You also have to live there as your main home.
It can be hard to decide whether or not to get a reverse mortgage. The most important problem is one of feelings. We're all taught to try to buy a home and build equity over time. With a reverse mortgage, we make the mental leap to actually reduce the value of our homes. Even though this seems like a smart way to use the equity in the nest egg, it makes you, me, and everyone else very nervous.
For some seniors, the choice to get a reverse mortgage makes sense, while for others, it doesn't. So that problems and scams don't happen as often, banks are required to have seniors who want to get a reverse mortgage meet with unbiased third parties to talk about the pros and cons of getting one.
If you or your parents are retired and having trouble making ends meet, you need to be flexible about how you handle money. Reverse mortgages may be a flexible option that makes sense for your situation. At the end of the day, you can't take your home's equity with you.
