Older homeowners are realizing they can
take advantage of the equity in their homes without selling or moving from the
house. A reverse mortgage provides a way
to convert home equity into additional monthly income, a line of credit or a
lump-sum payment to the homeowner without ever giving up title to the home and
without incurring mortgage payments.
A senior homeowner can use funds from a
reverse mortgage to supplement their monthly retirement income through the
purchase of annuity products, pay for long-term care insurance, even gift money
to their heirs and the funds are tax-free.
"As many seniors approach
retirement, they begin to realize their major asset is likely to be their
house. By the time the average person
retires, they own a home that is usually worth more than they paid for it. It
is pretty amazing that a senior can receive income from their home and not make
monthly payments to a mortgage lender. A reverse mortgage is not new debt. Rather, it is a repositioning of assets so
seniors can live life more comfortably and fulfill some of their needs and
How does a Reverse Mortgage work?
The Reverse Mortgage is a simple
concept. A senior enters into a contract
with a lender that resembles a line of credit. The senior can draw funds for
any purpose up to the maximum available.
An alternative is the guaranteed monthly payment. The guaranteed payment
works like an annuity. The monthly
payment is guaranteed as long as the senior lives, even if that is far beyond
their normal life expectancy.
What happens when you're gone?
Upon the demise of the Senior their
heirs have choices. Refinance and keep the property. Sell the property to pay
off the mortgage. Either way any remaining equity belongs to the Heirs. If the senior owes more than
the property is worth the lender will accept the property in full satisfaction
of the debt. No liability to
their estate. If a disadvantage exists, it is that Seniors
are spending their Kids inheritances.
It's your money, why not enjoy it?