If you are a homeowner over the age of 62, you may be able to use a reverse mortgage to turn your home equity into cash to cover living expenses, healthcare expenditures, home improvements, or whatever else you require.
However, homeowners do have other options, such as home equity loans and home equity lines of credit (HELOCs).All three allow you to access your home equity without having to sell or leave your house.
These are distinct loan programs, so it's important to understand your alternatives before deciding which is best for you.Reverse Mortgage A reverse mortgage differs from a forward mortgage in that the lender pays you a proportion of the value of your home rather than the other way around.
Your debt grows over time as you make payments and interest accrues, but your equity falls as the lender purchases more of it.You keep the title to your home, but the loan becomes due if you leave it for more than a year (even if it is for a hospitalization or nursing home stay), sell it, or die—or if you fall behind on your property taxes or insurance, or if the house falls into disrepair.
The lender sells the home to recoup the money it paid you (plus costs). Any remaining equity in the residence goes to you or your heirs.Examine the various types of reverse mortgages and select the one that best meets your requirements.
Before you sign anything, go over the fine print with an attorney or tax counselor. Reverse mortgage scams aimed at stealing the equity in your home frequently target older folks. The FBI advises against responding to unwanted advertisements, being wary of persons offering you a free home, and taking payments from someone for a home you did not buy.
4 It should be noted that if both couples' names appear on the mortgage, the bank cannot sell the house until the surviving spouse dies—or one of the tax, repair, insurance, relocating, or selling-the-house scenarios stated above occurs. Couples should carefully consider the surviving spouse issue before committing to a reverse mortgage.
Source: Investopedia.com