3 Benefits Of A Reverse Mortgage
For many individuals, their home is one of their most valuable assets. If you're short on cash and at least 62 years old, one way to cover your budget shortage is to take out a reverse mortgage.
A reverse mortgage is a financial product that allows you to borrow against the value of your home. While it's not absolutely necessary that you have your home paid off, you need to have a significant amount of equity in your property. Here are a few of the benefits of a reverse mortgage.
1. There's No Limitations Concerning How You Use the Money
Unlike some other types of loan products, you're free to use the proceeds from your reverse mortgage however you want. You can use the funds to travel, pay down debt, cover your daily expenses, purchase an automobile, or complete home repairs. Or, you can park the funds in your savings or investment account and access the money as needed to cover future expenses.
2. You Have Options for How You Receive the Mortgage Proceeds
How you receive the proceeds from your reverse mortgage depends on the terms and options for your specific loan. Some reverse mortgages provide the funds as a one-time lump sum. However, other alternatives allow you to receive the loan proceeds as fixed monthly payments.
The best option will depend on your specific financial needs. If you need a large sum of money to get caught up on bills or pay hefty expenses, you may prefer to receive all the proceeds at once. However, if you need to supplement your monthly income, regular payments are typically more appropriate for your financial needs.
3. Repayment Isn't Necessary as Long as You Live in the Home
The repayment terms for a reverse mortgage are slightly different from those associated with other loan products. You don't have to pay back the money that you borrow until you're no longer living in the home, either due to selling the home or your death.
Should you decide to sell the property, the funds to repay the loan will come from the proceeds of your sale. Reverse mortgage rules state that the payoff amount for your reverse mortgage may not exceed the value of your home; you won't have to worry about having to bring additional funds to closing to pay the loan off.
In the event of your death, your heirs will be responsible for paying off the reverse home mortgage. They can do so by selling the property, or they may use your other assets to pay off the loan.