You're getting older and you can see all the equity sitting in
your home, but you need money now! What are your alternatives?
Well, you could sell your home and buy something smaller and
spend the difference or you could consider taking out a reverse
mortgage. But if you opt for a reverse mortgage, there some very
important things you need to know. Basically it works like this.
You have equity that has grown in your home by either house
prices going up or you paying off your mortgage. You can now
actually borrow the equity and pay interest on it which is
basically backwards from a traditional mortgage. Now you may be
asking yourself why you would do that. First, you get a monthly
check from the bank that you can spend anyway you want. You or
your estate pays the total amount you were given over time plus
interest.
This is where you have to watch reverse mortgages. The interest
rates can be extremely high and you can often owe up to 3 times
what you were paid. Often these mortgages are paid back when you
die and your estate handles it or when you sell the home. To
qualify for one of these, you have to actually be the owner of
the home and live in it. Remember, it doesn't work for rental
properties. Each company that offers reverse mortgages
establishes their lending guidelines on the amount of the loan
but a good rule to follow is the older you are and the more
expensive your home, the greater the loan amount.
One of the advantages about a reverse mortgage is that you can
actually pay it back anytime you like. They become immediately
due if you die however, so make sure to include it in your will.
If you decide not to pay your property taxes, insure the
property or maintain it, the lender can actually call the loan.
So be sure to take care of these things or you may get yourself
into trouble. We recommend that you speak to your lawyer before
going ahead with a reverse mortgage. They can be complicated and
confusion and it is critical you understand exactly what you are
getting yourself into.
About the author:
Amy-Jo Strutt is a successful writer and regular contributor to
reverse-mortgages-loans.com - An online resource to help you
find the very best information on mortgages, foreclosures and
loans.
http://www.reverse-mortgages-loans.com/foreclosure
