A reverse mortgage is a special kind of loan insured by the government that converts your equity into cash. Unlike a traditional mortgage where the homeowner is making payments to the lender, the lender makes payments to you. You can choose to receive monthly payments or a lump sum, or even a combination of the two. You are not forced to repay this loan until you sell your house or die. These loans can be expensive and should be used only as a last resort.
Requirments:
- Must be at least 62 years of age
- Must have a good amount of equity in your home
- Must be the primary resident
Positives:
- No income requirement
- Minimal credit requirements
- Fast cash
Negatives:
- Loans are very expensive, can cost you up to 10% of the value of your home in fees
- Unable to pass home to heirs
- You are still responsible for property taxes and maintenance
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