Seniors aged 62 and over are able to convert the equity in their homes to monthly income or a line of credit. Reverse Mortgages can also be used to purchase your retirement home. A reverse mortgage is a type of loan specifically designed for seniors, age 62 or older, that allows them to convert a portion of the equity in their home into cash. Unlike a traditional loan, with a reverse mortgage the borrower does not have to make payments or pay interest; instead, the loan does not have to be repaid until the borrower moves out of the home, or passes away. This provides seniors with a way to access their home’s stored wealth without selling the property.
The reverse mortgage allows seniors to benefit from the assets they have built up in their homes without the burden of regular loan repayments. This may allow them to remain in their home longer and/or improve their quality of life. It can be a great option to supplement fixed income and reduce financial stress in retirement. Of course, there are associated costs, such as mortgage insurance premiums, closing costs, and origination fees. Additionally, borrowers are responsible for taxes and insurance for their home, as well as all other normal upkeep. Additionally, depending on the loan structure and the borrower’s circumstances, the balance of the loan could increase over time, potentially eating away at the borrower’s equity. It is important to speak to a mortgage specialist who can provide advice and explain the terms of any loan and its associated costs. Ultimately, a reverse mortgage can be a great way for seniors to supplement their income and age in place, however, it is important to understand the pros and cons before committing to a loan.