Reverse mortgages allow seniors to draw on their home equity
- Posted by admin on July 18th, 2008 filed in Reverse Mortgage Info
Q: My wife and I have just retired. Our home is paid off but we are concerned about having enough money to enjoy our retirement. Is there anything we can do to get the equity out of our home to live on now?
A: For adults over the age of 62 who own their home and plan to continue living in it there is a form of mortgage - called a reverse mortgage - that could be the solution to your need to have money today.
A traditional mortgage is one in which you borrow the money to purchase a home and pay it back, with interest, on a monthly basis. This is the type of loan most homebuyers use to make their purchase. Equity builds up over time and eventually you pay off the loan either when you sell the property or at the end of the term of the loan.
With a reverse mortgage you can turn the value of your home into cash without having to move and with no monthly payments to make. You do not have to pay back a reverse mortgage so long as you continue to live there. Instead of turning your income into equity, you reverse the process and turn your equity into income.
There are a variety of options on how to take the income from the mortgage. You could arrange for monthly cash advances, a single lump payment, a credit line account that you draw on as needed or any combination of these.
Even better, there are no restrictions on how you can spend the money. Travel, medical expenses, remodeling or just adding a cushion to your financial situation are all legitimate reasons people have elected to take a reverse mortgage. So long as all owners of the property are at least 62 years old and it is a single-family home (detached, town home or condominium) or a two- to four-unit building you are likely to be eligible for a reverse mortgage.
Unlike a traditional loan where you build equity, with a reverse mortgage you build debt as you withdraw the home’s equity - but you postpone having to repay that debt typically until you leave the home by moving or through death. An exception to this would occur if the value of your home rose considerably over the time you had the reverse mortgage. In that case, you could actually have some equity available even after you have taken what you could on a reverse mortgage. You keep any difference between what you owe the lender and the value of the home at the time the reverse mortgage is paid off.
As with any important financial decision it is best to consult with a professional - a bank, mortgage broker or a REALTOR® - who could help you decide if a reverse mortgage is appropriate.
Found here.
Sphere: Related Content
July 29th, 2008 at 4:35 pm
Stimulus Package “Deja vu”, Not really!
As the brains of our economy continue to brainstorm how to get us out of the mess the real estate market first got us in and now high gas prices and a declining economy over all, the easy way out seems to be again an economic stimulus package.
Not so fast, not again.
First- president bush opposes it.
Second- according to the experts, only 20 percent of the people who got stimulus package number one said the rebate led them to spend more and the rest, well it seems that the rest just took the money and put it into their savings account.
Economic stimulus package number one was suppose to get our slow economy going, by then president bush had not heard of a 4 dollar a gallon of gasoline.
By now that’s old news and as he put it on he’s own words “he’s heard of it now”.
Well now mr president, one gallon of gas almost hits the 5 dollar mark have you heard of it?
Anyhow, the 100 billion dollars in checks that circulated among many americans ($600.00 for singles and $1,200.00 for couples) apparently didn’t help.
The money went out on time and gas prices went up just on time as well.
With gas prices, food prices also went up.
Isn’t that how it usually works?
Gas prices go up and everything goes up, after all business have to make up for the extra expenses and they just pass the check onto us.
Here’s an idea!
How about lowering the tax on gasoline?
Do we really know how much money we pay on gas taxes in the U.S?
Aren’t this taxes imposed by our government, well maybe our government can really give a stimulus to our morale and lower the taxes we pay on gas prices.
A lower tax in gasoline prices will stimulate business and consumers, it’s not rocket science!
A quote by wikipedia: “Fuel taxes in the United States vary by state. For the first quarter of 2008, the average state gasoline tax is 28.6 cents per US gallon, plus 18.4 cents per US gallon federal tax making the total 47 cents per US gallon”