Increasing numbers of homeowners around the US are using Reverse Mortgage Loans to boost their income in retirement. With a Reverse Mortgage you could take advantage of your property value now, without having to move or downsize.
If you are over 62, this is why you should consider a Reverse Mortgage.
1) A Home Equity Conversion Mortgage (HECM) is the FHA’s Reverse Mortgage program. It allows you to convert some of the value in your home into tax-free income. You can spend this money how you want and you may want to supplement your income in retirement, clear any debts, pay for vacations, help your family or improve your home.
2) No required monthly payments. Unlike a traditional mortgage, if you don’t want to pay any of the loan back during your lifetime, you don’t have to. Like any other borrowing, an interest rate is charged and any interest you choose not to pay is simply added to the total and paid when the property is no longer your primary residence. This means you can boost your income now without the pressure of required monthly repayments.
3) You could become repayment mortgage or debt free. Reduce your monthly outgoings by clearing any remaining mortgage balance or any credit bills or loans. Without the drain on monthly interest payments you are free to use your funds as you wish.
4) You can take out a Reverse Mortgage with confidence. A Federally Insured HECM is a non-recourse loan, meaning that you can never owe the lender more than the value of your home and no other collateral can be used to settle the debt. No debt will be passed on to your heirs as a result of a Reverse Mortgage. Before any HECM can be agreed to, the potential borrowers must undergo HUD-approved counseling, offering unbiased and independent advice. This insures that all borrowers understand the features and costs of a Reverse Mortgage.
5) You could use it to help your loved ones. Releasing some of the wealth from your home could allow you to gift an early inheritance to your heirs. See your inheritance in action and help your family financially when they need it. You could help with wedding costs, tuition fees, family holidays or even help your loved ones buy their first home.
6) You could fund your dream retirement. With the money boost you could finally be able to make those home improvements you’ve always dreamed of, such as installing a more modern kitchen, redoing the garden or extending the home to accommodate friends and family. Or why not use some of the money you release to have the holiday of your dreams? Or to afford those luxury purchases such as a new car?
7) You could even use a Reverse Mortgage to buy a new home! A type of Reverse Mortgage known as a Home Equity Conversion Mortgage For Purchase (H4P) can enable over 62s purchase a new property. An HP4 requires a down payment equal to half of the price of the home. Think about what sort of home you could get if you only needed to find half the money.
8) The money can be released in a way that suits you. There are a variety of different options available for you to tap into your home wealth, including a tax-free lump sum, monthly installments to boost your income or a flexible line of credit so that you can choose when to take money out, and how much to take out at each time.
9) You can create a growing line of credit. If you choose to take out a Reverse Mortgage as a line of credit and do not draw down on it, the amount that is unused will grow each year. Set one up today and it will grow over the years giving you security in retirement and in your home.
Article by responsiblereverse.com
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