What Is a Reverse Mortgage?
A reverse mortgage is a loan that a homeowner can take out on their home’s equity. Sometimes referred to as an equity release, this transaction allows the homeowner to access and take advantage of their assets without having to sell their home.
Once the reverse mortgage is taken out, the borrower must immediately pay off their existing mortgage. Many homeowners will pay off their primary mortgage using their reverse mortgage loan.
Typically, the reverse mortgage loan will not be due until the home is sold, or until the last borrower dies.
How Does a Reverse Mortgage Work?
If you qualify and are approved for a reverse mortgage, you will be able to access a percentage of the value of your property. Once you have received your loan and paid off your remaining mortgage balance, you will be able to utilize the remaining money freely.
Many homeowners will consider taking out a reverse mortgage to meet financial responsibilities, such as:
- Medical expenses
- Emergencies
- Home improvements
- Pressing debts
- Educational loans
- And legal fees
You do not have to make regular payments on your reverse mortgage, but the loan must be paid in full at the end of the term.
Who Qualifies for a Reverse Mortgage?
Not just anyone can get a reverse mortgage, to qualify you must meet the following criteria:
- Your home must be of a certain value
- The homeowner(s) must be 55 years of age or older
- The home must be your primary residence, meaning you live there more than six months out of the year
The amount of money you can utilize will depend on the total value of your home. If you are interested in investing in a reverse mortgage, you should start by having your home’s value appraised, before getting in touch with our brokers at Today's Mortgage Choice.
What Are the Pros and Cons to a Reverse Mortgage?
Before investing, it is crucial to weigh the pros and cons of a reverse mortgage. Our brokers can go over these factors in greater detail during your consultation.
- You do not owe payments until the loan is due
- You can utilize your loan freely
- You can take advantage of your home equity before you sellt
Pros
- Your reverse mortgage interest rates will increase the longer you have the credit out without repayment
- The loan must be paid in full at the end of term
- Your home equity will decrease over time
Cons
Invest in a Reverse Mortgage with Today's Mortgage Choice
For expert guidance, professional advice, and access to the best reverse mortgage rates, trust Today's Mortgage Choice.
Call to set up your consultation today. We look forward to working with you!