There are many different financial decisions you have to make during the later years of your life. Some of these decisions help to shape the kind of lifestyle you’re able to live. If you need extra income, one choice you could make is to obtain a reverse mortgage. However, there is a lot of confusion regarding exactly how reverse mortgages operate in practice. To help, below are four things that seniors can expect when they get a reverse mortgage.
You Will Still Live in Your Home
A reverse mortgage is a way to use the equity you have built up in your home’s mortgage as a kind of income. Many seniors worry that they will be forced to move out of the home that they’ve spent so much time in. Fortunately, that is not true at all. You won’t even be forced from your home if all the equity in the mortgage is exhausted. Most contracts for reverse mortgages in fact state that the homeowner and their spouse will be allowed to continue living in that home for the rest of their natural lives.
You Have Options for How to Receive Your Income
Choosing a reverse mortgage also gives you a number of different options for how you can transform your mortgage’s equity into income. You could, for example, choose a fixed rate loan that will grant you your payment in one lump sum. Alternatively, you could elect for a monthly payment, a line of credit, or another option. You may even be able to choose a combination of different options best suited for your financial needs.
You Won’t Have to Make Any More Payments on Your Mortgage
One of the benefits of a reverse mortgage for seniors that have not paid off their home completely is they will no longer be required to make monthly mortgage payments. This will remain the case for as long as the terms of the contract for the reverse mortgage are abided by.
It Will Be a Non-Recourse Loan
You should also be aware of the fact that a reverse mortgage is a non-recourse loan. This means that you, your spouse, and your heirs will not be held liable if the reverse mortgage exceeds the value of the home. This should give you further peace of mind regarding obtaining a reverse mortgage.
Reverse mortgages might be the right choice for certain seniors that own a home. With some research on what to expect with a reverse mortgage loan, you can decide whether or not it fits your circumstances. Make the decision of whether or not to obtain this kind of mortgage carefully. While it may be right for certain people, you need to look at whether it’s right for you.
