Who can get a reverse mortgage? (b)
You have to be 62 years old or older and have equity in your home.
If your home is worth more than what you owe on it, you have equity in it.
How does it work?/b>
When you bought your home, the bank gave you a loan to pay for it. Each month, you make mortgage payments to pay back the loan.
The opposite of this is a reverse mortgage. With a reverse mortgage, the bank takes the value of your home and gives you a monthly payment.
You pay back the money when you sell your house, refinance it, move out permanently, or die. When that time comes, you or your heirs will have to pay back the loan and interest all at once.
How do I get a reverse mortgage?
You can get a reverse mortgage from most of the big banks and lenders.
When you contact the lender, the following things happen:
A home appraiser will figure out how much your home is worth.
The amount you can borrow will depend on how old you are, how much equity you have in your home, and how much the loan will cost.
You choose how you would like to get the money.
You can get the cash:
As a lump sum
Payments made every month
As a credit line, which lets you decide how much and when to use the loan.
You sign a contract. In the contract, it will say how much you will get paid and how much you have to pay back, with interest.
Keeping up with your reverse mortgage
You must do the following to keep your reverse mortgage in good standing:
Pay your taxes on time if you own a home.
Fix and fix up your house.
Get insurance for your home.
Your lender can cancel the reverse mortgage and ask for payment right away if:
File for bankruptcy
Rent out a part of your home
Changing the name on the title
Use your property as collateral for a new loan.
b>Things to think about/b>
Reverse mortgages cost more than regular home loans or home equity lines of credit.
The interest rates and fees are also higher. Interest is added to the amount you owe each month based on the amount you still owe. This means that the total amount you owe goes up every month.
Keep in mind that you are taking out a loan against the value of your home. This means that you and your heirs will have less money.
Shopping for a reverse mortgage
Shop around and see what different lenders have to offer. You should compare the terms and look for the loan with the lowest interest rate, points, and fees.
