A home loan that you don't have to pay back as long as you're alive or as long as you live there? Reverse mortgages make this happen, even though it sounds too good to be true.
A reverse mortgage is a loan you take out that you don't have to pay back as long as you still own the property you bought with the loan. You can use the money you get from a reverse mortgage to invest in other things. Reverse mortgages let you turn the value of your home into cash. You don't have to move, and you don't even have to pay back the loan every month.
Reverse mortgages can give you cash in a number of ways. With a reverse mortgage, you can get the money all at once or in a lump sum. With a reverse mortgage, you can also choose to get a cash advance every month.
A reverse mortgage can also give you cash in the form of a "creditline" account. With this creditline account from a reverse mortgage, you can get as much money as you need, whenever you need it. Even if none of these options work for you, you can still get cash from a reverse mortgage by using a mix of the above options.
Whether you want your reverse mortgage money all at once or in instalments, the most important thing is that you don't have to pay it back until you die, sell your home, or move permanently. Most of the time, homeowners who are 62 years old or older can get a reverse mortgage.
Reverse Mortgage vs. Other Home Loans
In order to pre-qualify for most other loans, your income and assets are checked in a planned way. This is done to show the lender that you will be able to pay back the loan on a monthly basis. Since there are no monthly payments with a reverse mortgage, you do not have to go through these time-consuming prequalification steps. Getting a reverse mortgage is easy and doesn't take much work. There is no minimum income needed, and you don't have to pay anything each month. With a reverse mortgage, you also don't have to worry about losing your home.
What's bad about a reverse mortgage
There is always a different side to every story. Reverse mortgages have some good points, but they also have some bad points. You already know that reverse mortgages don't have to be paid back every month. This means that when you get a reverse mortgage, you take equity from your home and turn it into cash. This is not good news for either your debt or the value of your home.
How does it work? With some mortgages, you have to pay a down payment when you buy a home. As time goes on, they use the money they earn to pay back the money they borrowed to buy the house. This cuts down on their debt and makes their home worth more.
Everything works backwards with a reverse mortgage. You have your home. You turn the value of it into cash. Then, you take out some of that cash every now and then, which adds to your debt and decreases the value of your home.
This doesn't always happen with reverse mortgages, though. If the value of your home goes up quickly or you only have one loan on it, your equity could grow over time.
