How A Reverse Mortgage Can Work For You
Are you on a fixed income? Are you concerned that the cost of living has risen, while your monthly cash flow has remained the same? If so, you’re not alone!
Many homeowners, especially seniors, are feeling the stress of having to stretch their monthly income just to meet their basic needs.
Fortunately, over the past few years, we’ve seen a tremendous increase in property values. Many seniors, whose homes are either paid off or who are carrying very small mortgages, may not realize how much their homes are actually worth in today’s market… and how much money is locked up in their property.
If you are at least 55 years old, are feeling a little tight financially, and have a fair amount of equity in your home, you could be a good candidate for a reverse mortgage. A reverse mortgage can unlock all that cash, and help you to maintain your financial independence by allowing you to turn a portion of your home equity into a steady income. Put simply, it's a loan that uses your home’s equity as collateral.
Supplementing your income using this financing tool is tax-free, with no repayments required until you sell your house, or until you pass away. The maximum amount you can borrow is up to 55% of the total appraised value of your home, depending on your age. If you want to continue living in your home while enjoying a more comfortable retirement, a reverse mortgage might be something to consider.
There are several benefits to taking out a reverse mortgage, including:
- You can turn some of the value of your home into cash without having to sell.
- You don't pay tax on the money you borrow.
- This new income source doesn’t affect Old-Age Security (OAS) or Guaranteed Income Supplement (GIS) benefits you may be receiving.
- You still own your home.
Homeowners can choose to receive the money as a lump sum, a fixed monthly payment, or a line of credit. You can use the money for anything you wish, such as paying for home repairs or renovations, covering your living expenses, repaying debts, or taking a vacation.
However, in order to be eligible for a reverse mortgage, you must pay off and close any outstanding loans or lines of credit that are secured by your home equity. Luckily, you can use the money you get from the reverse mortgage to do this.
As with any mortgage, there are some other important things to consider, including:
- Interest rates are higher than most other types of mortgages;
- The equity in your home will decrease;
- Your estate will have to repay the loan and interest within a set period;
- There will be less money in your estate to leave to your children or other beneficiaries.
Before committing to a reverse mortgage, don't forget to shop around and explore your options. Team Broady can connect you to trusted mortgage professionals who can help.
If you want to learn more about how a reverse mortgage could work for you, or what your home is worth in today’s market, don’t hesitate to reach out to Team Broady today at 514-613-2988 or email@example.com.