The A-Z Of Reversed Mortgages

If you feel the end of your work or career days could be in sight, you will be starting to think about planning for retirement. One of the factors to take into consideration is your own well-being. How do you cope once the money stops coming in? An additional source of income or multiple income streams could be needed.

However, some of these options require money you may not have, and what happens when you do not have that financial instrument for living a healthy and wealthy post-retirement lifestyle? If you truly want to live your dream, you must come up with other options. In this guide, Belle can suggest you how to leverage your home equity to cater to your post-retirement goals.

You no longer have to worry about what the future holds. And enough with your home being a liability. With a reverse mortgage, you can convert your home into an asset, while still retaining ownership. So what’s it all about?

Is Your Home a Liability?

We’ve heard this statement a thousand times, and most of us agree that if our homes don’t put money in our pockets, but takes from us, then they are liabilities. You don’t have to place your apartment on Airbnb listing before it becomes an asset. With a reverse mortgage, you can generate a source of income from your home through your lender; this is calculated using a reverse mortgage calculator. Your reverse mortgage lender puts money into your pocket.

What makes a reverse mortgage different from a traditional loan? The latter removes money from your pockets – just like a liability. You have to make monthly repayments running into thousands of dollars, depending on your loan agreement with the lender. And failure to do so may put you at risk of losing your home. The last thing you want is to be homeless at the age of 85. Hence, a reverse mortgage is an ideal choice.

Accessing a Reverse Mortgage

There are two main types of reverse mortgages: the private, single-purpose reverse mortgage , and the Home Equity Conversion Mortgage (HECM). The former comes from private lenders, like Wells Fargo, whereas, the latter is a government-insured mortgage, and by that, I mean government agencies, like the U.S. Housing and Urban Development. According to this type of mortgage, the following counts:

• You cannot take more than your home equity
• If the lender no longer operates, you will still receive your reverse mortgage fund
• You can include other individuals as titleholders to enjoy similar protections

Be it as it may, the reverse mortgage isn’t restricted to the private mortgage and HECM. There is also the HECM for Purchase, which gives you leverage to purchase a new home using the proceeds of your reverse mortgage.

Is There Anything Else You Should Know?

Your lender determines your eligibility using a reverse mortgage calculator. First, you have to be at least 62 and reside in your primary, permanent home. When calculating your home equity, the lender will use the age of your home, its location, condition, current market value, and interest rate. Through these estimations, you will know the available amount you can receive. However, be sure that you need a reverse mortgage before contacting a lender.