You’ve probably heard of reverse mortgages before, probably on a television infomercial. The basic concept is simple: you can borrow against the equity in your home, and you don’t have to sell it. Instead of you paying a lender (as in a mortgage), the lender pays you.
But for all the benefits of reverse mortgages, especially to seniors, this financial tool is still frequently not fully understood.
A recent report from the Consumer Financial Protection Bureau said that many seniors do not fully understand how reverse mortgages work, and the lack of education is causing confusion for many people.
If you’re not sure whether reverse mortgages are right for you, here’s a quick primer.
Some quick facts about reverse mortgages:
- You can be paid in a single lump sum, monthly, or even a combination
- Homeowners pay interest to receive the money, but rates vary depending on the lender
- In the United States, you must be at least 62 years old to qualify for a reverse mortgage
- In the United States, to qualify you must live in the home and it must either be fully paid off, or will be fully paid off by the time of closing
Reverse mortgages may be best for seniors who are living in homes which are either paid off, or nearly paid off, but who still need additional money for retirement, either due to unexpected healthcare costs or simply longer life expectancy. Ideally, the more money a homeowner’s house is worth, the more potential equity is inside it.
No matter what, the most important first step for people considering reverse mortgages is education and research. A good place to start is SeniorSurance.com, with it’s own in-house reverse mortgage expert, and even a free reverse mortgage calculator which you can use to compare rates and see which options are available.
Visit SeniorSurance.com for more information.