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Retirement is a time to slow down and enjoy life and do things that you couldn’t do while having a full-time career. To be able to fulfill some of the dreams you have upon retirement, you will need some extra cash. One way to achieve this is by taking out a reverse mortgage loan. Reverse mortgages take part of the equity in your home and turn that into payments to you. It’s kind of like getting an advance payment on your home equity. The money you get is usually tax-free.
The Advantages of a Reverse Mortgage Loan
The biggest advantage of getting a reverse mortgage loan is that you won’t have to pay a monthly house payment every month. That gives you more money to do the things you want to do. Instead, you can choose to get your loan proceeds delivered to you in a monthly check.
When you take out a reverse mortgage loan, you can stay in your home as long as you like. Unlike a conventional mortgage, you won’t be evicted from your home for not making payments. The only way of defaulting on your reverse mortgage loan is if you file for bankruptcy, move out of your home, or fail to meet other responsibilities like failing to pay the taxes and insurance.
How Much Can You Get?
Reverse Mortgage Loans may not be the best option for everyone. The loan may not be worth it if you don’t have enough equity in your home. To make determinations such as how much you can borrow, lenders use a reverse mortgage calculator. The value of your home and the amount that the calculator says you can borrow are two different things. Federal rules prohibit you from borrowing all the equity in your home.
Requirements for Getting a Reverse Mortgage Loan
There are certain requirements to qualify for a reverse mortgage loan. After it is determined that you have enough equity in your home, other things are required to qualify for a home mortgage loan. Those things are:
- You must be at least 62 years old.
- You must pass the requirements of a credit report.
- You must live in your home permanently.
- If you own an apartment building and one of those apartments is your primary residence, you still may qualify for a reverse mortgage loan.
Getting a Reverse Mortgage Loan When You Already Have a Mortgage.
If your home is mortgaged, you might still be able to get a reverse mortgage loan. You can’t keep two mortgages, but you can pay off the existing home mortgage with the funds from the reverse mortgage loan. The benefit here is to get out of a short-term loan with having to pay monthly payments and replacing it with a long-term reverse mortgage loan that requires no payments to be made. This can relieve a lot of your anxiety knowing that you won’t be evicted from your home for non-payment.