Thinking About Refinancing? Here Are Some Reverse Mortgage Facts
If you are thinking about refinancing, you should know these reverse mortgage facts. A reverse mortgage is a special type of home loan that allows borrowers who are at least 62 years old (and meet other eligibility requirements) to convert a portion of the equity in their homes into cash. The primary benefit of a reverse mortgage is that it provides you with money to help you cover your retirement expenses without giving up the title to your home or sell it. You’ve put thousands of dollars into your home and you have every right to use that money. With a reverse mortgage, you can continue to live in your home and even use the proceeds of your loan to help cover your monthly mortgage payments.
Many retirees may assume that because they no longer have work income, they don’t have any options to get a new mortgage or refinance an existing one. On the contrary, there are ways that retirees can get access to mortgage loans which allow them take advantage of low interest rates by refinancing.
Not every reverse mortgage is the same. There are a wide variety of different options when it comes to payment. The Federal Housing Administration (FHA) offers a selection of different payment plans:
- Equal monthly payments as long as one borrower remains alive
- Monthly payments for a fixed term
- Line of credit which lets you choose how much money you want to take and when
- Combine lines of credit with the first or second monthly payment options
Keep in mind that a reverse mortgage isn’t for everyone. There are some costs that should be taken into consideration such as maintenance, taxes, and servicing fees. Don’t write it off just yet, though. Reverse mortgages have a lot of benefits that may help you get monthly payments or a lump sum that will help you with medical bills, home repair, or even investments that will increase your savings. Find out more about reverse mortgages here.