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Reverse mortgages are intended for the senior set. They allow you to have a bank buy back your home while you’re living in it. You can take a lump sum, a monthly payment or a line of credit. Although it sounds like an amazing opportunity, consider a few things before you or someone you know takes part.
Age And Time
As mentioned earlier, reverse mortgages are for people who are at least 60 years of age. The older you are, the more you benefit, since your home has more equity and your life expectancy is shorter. In short, if you’re 73 instead of 63, then a reverse mortgage is to your advantage.
Another thing to think about is how long you intend to stay in your home. If you are thinking of moving, then this is not right for you. However, if you are planning to live out your life in your home, this is a good way to fund home repairs, health care equipment or an active retirement.
Lenders And Interest Rates
Look for a trustworthy lender and independent counseling before signing anything. Legally, you must meet with a counselor. Your bank has a recommended list of people in the area to help you determine whether a reverse mortgage is the right answer. You’ll probably be pitched other products like annuities or health insurance, but you don’t really need them.
Keep in mind, these mortgages require repayment upon selling your home. The fees are higher than a typical mortgage, around five percent of the home’s value. Remember that if you move away, you need to pay the money back plus interest. Make sure you have enough so when the time comes to move, you do so without coming up short.
Other Options To Consider
If a reverse mortgage is not the best choice for you, mull over the idea of selling the house and moving into something smaller, such as a condo. If your children do not want to inherit your home and a house is too much upkeep, selling will provide you with the capital to purchase something smaller and with less hassle.
If you still need extra income, look at government benefit programs for seniors. Check out home equity loans or credit offers for emergencies.
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