If you’re 62 or older – and want money to pay off your mortgage, supplement your income, or pay for healthcare expenses – you may consider a reverse mortgage. It allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. But take your time: a reverse mortgage can be complicated and might not be right for you. A reverse mortgage can use up the equity in your home, which means fewer assets for you and your heirs. If you do decide to look for one, review the different types of reverse mortgages, and comparison shop before you decide on a particular company.
reverse mortgage is a type of real estate loan where the homeowner withdraws a portion of their equity but don’t have to repay the loan until they leave the house. One of the most popular types is the Home Equity Conversion Mortgage (HECM), which is insured by the U.S. federal government. Although widely available, HECM products are only offered by FHA-approved lenders.
Reverse mortgages can be a solution for consumers ages 62 and older who own their homes outright — or at least have a considerable amount of equity to draw from.
You may be wondering why anyone would want to borrow against a home they worked hard to pay off. Why not remain in your home and live there debt-free?
Corona Virus Changes
The Department of Housing and Urban Development on Thursday directed companies that service government-insured mortgage loans to give beleaguered borrowers the option to defer payments for up to a year, effective immediately.
The move — coming just 15 days after HUD announced a two-month moratorium on evictions and foreclosures — underscores the urgency of the deepening economic crisis caused by the coronavirus outbreak. The $2 trillion economic rescue package passed by Congress last week included up to a year of payment relief on federally backed mortgages.
Why Would Someone Want To Consider A Reverse Mortgage?
Whether they need financial assistance or just want access to more funds while they live their retirement and reach other financial goals, there are several reasons why someone may want to consider a reverse mortgage.
Eliminate or lower their monthly mortgage payments, freeing up more money each month
Consolidate their debts
Pay for in-home care
Make home improvements
Purchase a new home with a Home Equity Conversion Mortgage for Purchase
Supplement their income to allow other assets to grow in value
Create an emergency fund or increase their savings
Protect home equity from declining home markets
Have access to the net worth tied up in their home
