Is a Reverse Mortgage for You?

Retiring gives you the opportunity to enjoy some hard-earned relaxation time. However you might feel far from relaxed if you are in a state of financial hardship. It is possible your retirement income does not provide you enough money to live comfortably month to month. Or you may be comfortable, but lack the funds you need to enjoy a lot of extras or pay for unexpected financial emergencies. Regardless of which situation you are in, a reverse mortgage could provide the financial protection you desire.

What is a Reverse Mortgage?

As you may know a traditional home loan triggers a certain process. As part of that process you have to repay parts of the mortgage on a regular basis beginning soon after you initially borrow the money. The problem with during retirement is that you are likely trying to find a way to reduce your bills - not adding to them. A reverse mortgage is a mortgage that does not require such partial repayments to be made on a scheduled basis. Instead the payments are made on your schedule (as long as you continuously meet the other requirements of the loan).

Other than staying in your home while the loan is active, there are some other basic rules you must follow. You must be at least 62 to apply, and it is also necessary for you to continue paying property taxes and other upkeep costs for as long as the loan lasts too.

What are the Benefits?

The reverse mortgage process is so different that it can feel for a time like you do not have a mortgage at all! Due to how how reverse loan contracts work you can spend the money you receive your way. You are free of the worry of making repayment in a set amount of time, as a reverse mortgage does not have a loan period, at least not in the traditional sense. Instead the loan lasts for as long as you remain the primary owner of and a resident in your house. So in theory it could last forever as long as you don't move house.

Another great benefit of a reverse mortgage is you can select how you want to receive your payments. You can choose ongoing equal payments for a period of time, a line of credit you draw from as needed, or a one-time large payment. The latter option is handiest when you have a major immediate expense to deal with, such as car issues or an injury. In some cases, you can use a combination of those options, meaning that you have total borrowing freedom and can choose what suits your current situation!

This is a collaborative post.