(ThyBlackMan.com) Before you even think about getting a reverse mortgage, it is important that you have a good understanding of what a reverse mortgage actually is. According to ReverseMortgageGuides.org, it can be defined as a type of loan that has to do with the equity that you have built up in your home, and it is only for seniors (62+). A reverse mortgage does not require the borrower to make any payments on the loan. Instead, the loan will come due when the borrower either moves out of the home or dies.
Getting the Money
When it comes to a reverse mortgage, the amount of equity that you will be able to borrow against is less that what you might get with a
more traditional type of mortgage. The major difference is that with a traditional mortgage, you will need to pay the money back by making a monthly mortgage payment. With the reverse mortgage, you don’t.
You can get the lending disbursement in a few different ways too. You can opt for a lump sum, monthly payments made to you, a line of credit, or a combination of those. This can make living on a fixed income in retirement a lot more comfortable.
Retirement
People work through their younger and middle age years so that they will be able to retire and not work through their golden age years. The thing about retirement though, is that you will want to do it on your own terms. There is little point in retiring if you will not have enough money to make ends meet from month to month. You also need to think about things like health insurance, and medical bills that will become more frequent and expensive the older you get. How will you pay for your medicine and still have money left over for the rest of your bills and food? Many people find that after retirement, they need to go out and find another job just to make it through the month. With a reverse mortgage, you won’t need to do that. You will be able to have your time to do what you have always wanted to do – be it travel, taking up a hobby, or just relaxing in the comfort of your own home.
Second Home
Many people have been taking a reverse mortgage and using the money to buy another home. This second home can either be used as a vacation property, or it can be rented out to provide another stream of income. For example, say that you have no savings for retirement and decide to get a reverse mortgage. You can use that money to buy a four-plex if you like. You will be able to generate a stream of income by renting out the units in the building and this can fund your retirement.
Early Retirement
We all know that you are eligible to draw on your social security at the age of 62. Compared to what you were making when you were working though, social security is a mere pittance. Alternatively, you could wait until you are 65 to retire (66 or 67 for those born after 1937). This will give you a bit of extra money each month. It still will be barely enough to live on though. If however, you decide to take out a reverse mortgage, you will be able to let the social security money continue to grow, as well as letting the money in your IRA or 401(k) to continue to grow. This will allow you to retire much earlier while not needing to worry about having any money to live on.
Travel
If you don’t have any sort of a plan for retirement, the chances are good that you will not be able to do any of that traveling that you have always dreamed about. Instead, you will be stuck in a rut wondering how you will get the money to pay for your daily living expenses. If you take out a reverse mortgage though, you will have enough money to pay for your living expenses AND do that traveling that you want to do.
There are many reasons for people to get a reverse mortgage. Which reasons make sense to you in your situation?
Staff Writer; Anthony Page
