A reverse mortgage is a way for seniors to get an extra income to help them with their expenses. A reverse mortgage works exactly the opposite way a mortgage works. Instead of making payments to the bank and building equity in your home, you are sacrificing the equity in exchange for payments. There are different ways to receive these payments; you can get them as a line of credit, monthly payments, or a single lump sum. You can also receive a combination of the three. A lump sum comes with a fixed interest rate, while the others come with a variable interest rate.
You don’t have to pay back like other types of loan. The reverse mortgage will be paid back when you decide to sell the home, die, or vacate it for a period longer than 12 months. It is important to know that the lender has no way to get their money back expect from the sale of the home.
You can get a reverse mortgage if you are at least 62 years of age, this is because they are meant to help seniors with a source of income. The home must be your primary residence, and all existing mortgages must be cleared before proceeding with the reverse mortgage.
Whether the reverse mortgage is the right option for you will depend on your financial situation. Another option to take is borrowing money using the home equity line of credit because it comes with much lower fees, but you have to pay it back.
If you are looking for ways to boost your retirement income and you are not worried about leaving your home in the Long Island area to heirs or maintaining the property, then a reverse mortgage can be an excellent way to get some much-needed cash when you are retired.