Considering Reverse Mortgages?

FinanceMortgage & Debt

  • Author Brad Cullipher
  • Published March 20, 2010
  • Word count 516

When people get into their sixties their lives will start to change from how they have been before. They will reach the stage where they will no longer be working, and that means they have to find a new way to finance their day to day living expenses. A reverse mortgage is just one of the ways this can be done.

The name of a reverse mortgage tells you exactly what it means. Basically it works in the opposite way to a traditional mortgage. When you buy a property you get a mortgage to be able to afford the purchase. Throughout the space of many years – perhaps twenty, perhaps twenty five for example – you will make monthly payments to start diminishing the size of that mortgage.

Eventually you will reach the stage where you make your last monthly mortgage payment and that means the house you live in is 100% yours at last. You own it completely and you owe the bank or mortgage company nothing. That means you could sell it and do what you wanted with the money.

But of course when you finish working for a living you will have a lot less money coming in as a result. You may have a pension and other savings to fall back on – things you have been saving towards and building up over the years. But these may not be enough to enable you to live the way you really want to live.

This is where a reverse mortgage comes in. The idea is that you will come to an agreement with a mortgage company or provider that they will pay you a monthly amount that unlocks some of the equity you now have in your home. Depending on the plan and the provider you might find you can get a lump sum instead of monthly payments, so consider which outcome would suit you the best.

The monthly payments basically entitle the company providing the reverse mortgage to a slice of the proceeds of the property when it is eventually sold. So for example when you die or you move into a care home you will have to sell the property and give a share of it to the lender to repay the money they have lent you against its value.

Obviously it pays to read up on all the information about this kind of mortgage before you decide to take one out. But it can provide another way to get a monthly income once you are over the required age. A reverse mortgage can make all the difference between scraping by on a daily basis to actually having the money available to enjoy life.

A reverse mortgage is also good if you don’t want to move or downsize your home. This may work for some people but if you love where you live then a reverse mortgage will be ideal for your needs. If you have a view over Houston, Fort Worth, Austin or anywhere else in the US that you love, it’s good to know you have the option to keep it.

American Capital Home Loans is your professional mortgage professional specializing in home loans, mortgage, refinancing, reverse mortgage, debt consolidation, and home equity loans. Serving Austin, Dallas, Houston, San Antonio Mortgage, Ft Worth, and all of greater Texas."

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