* Isn't it importanon to talk about money. Most retirees run out money during retirement, which can be challenging and very scary times for people. For some, the ideal choice is to take a loan, probably remortgage their homes. Unluckily for them, such moves come with dire consequences, one of which includes the high cost of monthly repayments which is something you naturally want to avoid when retired.
I do not recommend this option for any retiree, as it is detrimental to their finances and wellbeing. There is a better and safer option that guarantees financial security for anyone with a minimum age of 62 years. What am I talking about? It is not rocket science, but a reverse home loan. This unique mortgage differs from other types of home loans.
Don’t Get Too Excited; There is a slight Catch!
One of the upsides of a reverse mortgage is its long-term duration, which gives you enough time to achieve your financial goals and make repayments. However, this feature can also become a nightmare for some homeowners, as it comes with significant accrued interests. But thinking of the benefits, you do not have to make payments under pressure, and your lender can not evict you from your home, provided that you comply with the loan agreements.
This option gives retirees a breather. I will discuss the conditions for procuring this reverse home loan in the later section of this guide. Please stick with me.
What You Should Know About the Application Process
Applying for a reverse mortgage is simpler than you think, as long as you are 62 years of age and above, and you have a home that serves as your primary place of residence – this is a property you reside in permanently, which is the collateral. A private lender will determine your eligibility using a reverse mortgage calculator and taking into consideration the value of your home in terms of its age, condition, and location.
The lender also evaluates your creditworthiness and ability to meet up with the property taxes, insurance, and cost of maintaining the home. Also, if your home is tied to a current mortgage, you have to pay it off first. Once you meet these requirements, you can access your loan.
How to Access Your Funds
There are three ways to receive payments; they include:
Setting up a line of credit.
Receiving a lump-sum payment into your account.
Creating a monthly payment plan.
With a reverse mortgage, it is difficult for retirees and homeowners to default on a payment, as they have no deadline until they decide to sell their homes or in a situation where they breach the agreement, which includes the failure to pay property taxes and insurance, filing for bankruptcy, and lack of home maintenance.
However, compared to traditional home loans, reverse mortgages have less stringent conditions. If the homeowner cannot meet the payment, such an individual can decide to foreclose the home and use its proceeds to pay off the loan. Whereby the money is not enough to meet the total amount, the lender will forgive the remaining balance.
If you have several homes that sit on a property, you have to declare one of them as your permanent place of residence; this is a house with enough value to pay off your loan.