For many people, retirement is a time of spending time and money on things you couldn’t do while you were still working. The trouble comes in when your money starts running out because you are no longer working. Fortunately, just because you’re retiring doesn’t mean you should run out of money. Keep reading for one of the better solutions – a reverse mortgage.
But what is it?
When you take out a regular online you are normally bound by monthly bill payments as soon as the loan is paid over to you. One of the major benefits of a reverse home loan is that you don’t need to worry about repayment until the loan term comes to its end.
Why should I have one?
One of the most standout benefits of reverse home loan, or reverse mortgage, is that you need to live in your house in order for the loan to be valid. This makes it very difficult to impossible for you to be evicted from your house for non-payment. That there are no scheduled monthly repayments it is also virtually impossible to default on your loan. Just remember that a reverse home loan does not take away the other responsibilities that come with owning a house, such as maintenance, taxes and the fact that you need to remain solvent while you are subject to the loan conditions.
How do I apply?
Because it is still alone you have to go through the loan application process. This means that you will have to find out what amount you are eligible to loan. Because federal laws prevent you from borrowing of the full amount of your house equity, you will only ever be able to borrow a percentage of that amount in the form of a reverse home loan.
You need to be at least 62 years of age or older in order to be able to apply for a reverse home loan. When you apply credit check as well as background check will be performed on your account before the loan will be paid over to you. In addition to that one of the main loan conditions is that you will be required to live in the house against which the loan is taken out, as your main dwelling and residence. If your property happens to be one with multiple houses on it, you will need to live in one of these dwellings in a full-time capacity in order to apply and qualify.
If you have an existing home loan that is already bonded to your house, the amount that is still outstanding will have to be settled before you can access the rest of the funds which come with your reverse home loan. It doesn’t prevent you from applying for a reverse home loan, but just be clear on the fact that it will be subtracted from whatever amount is granted to you. Once your outstanding balance due has been settled, you are free to use the money that remains in your first home loan as you see fit.