A reverse mortgage isn’t usually at the top of everyone’s mind, but it can help you pay for things in your later years (the minimum age requirement is 62). Unlike traditional mortgage loans, you won’t have to make a monthly payment in order to pay back the loan that was given.
If you live in your house, no payments need to be made. The reverse mortgage must only be paid back if you move out or sell your home. The convenience of not making regular payments has made this an ideal option when it comes to getting cash to fund what one might not be able to afford otherwise.
How a Reverse Mortgage Works
Just like with a traditional mortgage, interest does accrue over the life of the loan. However, the requirement to make a monthly payment is eliminated until you move or sell your home. At the time that you no longer live in your home, the loan that was originally given plus interest will be owed.
In a nutshell, this works just like a mortgage but in reverse. It’s a great way to get a loan to cover emergencies or any other needs you may have without having to worry about how you’re going to be able to pay it back. This is often used when a homeowner knows they will sell eventually, and at the time of the sale, they’ll be able to pay it back from the funds that were generated from the sale.
The Benefits of a Reverse Mortgage
Any type of loan can be something that has you wondering if it’s really the best way to go about taking care of things. Here are some of the leading benefits that you can embrace with reverse mortgage loans.
· As a type of loan, it qualifies to be exempt from taxes.
Since loans aren’t taxable income, you don’t have to worry about paying them on the funds that you receive from a reverse mortgage. This is applicable regardless of if you receive the funds in a single payout or you choose to be paid in installments.
· Reverse mortgages are one of the most flexible forms of financing.
This is mainly due to the ability to only pay at the time you sell your home or move into a new home. You are also given the option to receive the cash as a line of credit to be used for emergencies, receive the loan throughout a series of installments, or just get it in a lump sum.
· You won’t be put at risk of losing your home due to non-payment.
Unlike a mortgage, this eliminates the risk of not being able to live in your home if no payment is made. By moving the loan payment to a time when you no longer live there, it’s a painless approach to get the money you need now.
As long as you meet the age requirement, this is one of the better forms of financing out there on the market as it provides you with a lot more flexibility than you might see elsewhere. As always, shop around first to make sure you lock in the best interest rates possible.