Just what is a reverse mortgage? Why would anyone want one?
On both a regular mortgage and a reverse mortgage, a mortgage loan is offered based on the available equity in your home. The amount you are borrowing, as a percent of the home’s value is called Loan to value, and the allowable loan to value varies by loan program.
In a regular mortgage, you need to make monthly mortgage loan payments to repay the amount you borrow plus interest. In a reverse mortgage, instead of making monthly payments to repay the borrowed amount, you receive, often in monthly installments, a portion of your home’s equity on which the loan is based.
Concerns: Some senior citizens do not like the idea of taking away from their children’s inheritance. The home can still be willed to the heirs of your choice, but they would need to refinance the note either with cash or with a new loan that paid off the reverse mortgage with a new mortgage.
Pros: Some heirs prefer that their parents live better, using the monthly installments to help pay for medical expenses or other lifestyle costs. Before you take out a reverse mortgage, you should certainly discuss it with any affected party if you are concerned. But if you are living on social security, especially if you were affected by the recent windfall avoidance regulation, a reverse mortgage might be a very good way to cover your monthly expenses and reduce your dependence on your offspring.
You need to know that not all reverse mortgages are created equal. Fees, rates and terms can vary, and may affect your heirs. To get the straight scoop from a licensed mortgage professional, visit www.ReverseEasy.com today.