Watch any major program on television and you’ll get hit with advertising about getting a reverse mortgage. But what the savvy media ads don’t say is how they work, what defines the option, and whether or not it’s worth your time and money. The small print at the bottom of the screen can be something to look at, but unless you are pausing the commercial and looking with a magnifying glass, you are missing out. With that in mind, it’s important to know what you’re getting into, and getting straight answers can be rough in these modern times, which is why this article is so important. Consider this a quick way to understand how this financial option can work and what you might not be told when you call the 800 numbers on the screen.
The easiest way to understand what this option entails is simple, when you own a home, you can utilize the equity that you have built in it and get cash. You are essentially pulling money from the value of the home, like a credit loan of sorts. This very rare kind of financial endeavor needs to be paid back and is often times targeted to seniors whom already own their house outright.
The money that is taken out can be quite a large lump sum, or it can be divided into smaller payments and given out throughout the years. The money is tax-free and there are not a lot of restrictions as to how the money is used, or how it is invested. For some, the idea of getting money out of their home can be a great way to invest in a new business, forex, or already the stock market. Some might use it for repairs, and other opportunities in terms of finance, but overall, the money comes from the equity built up from paying off the home.
The assistance becomes interesting in regards to paying back the loan in terms of a mortgage. The money doesn’t require payback during life. In fact, a borrower gets a deferment until either the home is sold, or there is a death. This creates an interesting point for many retirees that are looking to live a bit more comfortably, assuming they are not going to move out of their home.
The application course of action is a bit stiff, and you can’t be under 62 years old. The equity in the home must be large enough to cover any existing mortgages and the value is determined by a set of rules, standards, and regulations that aren’t always agreeable by homeowners.
For those that are far from retirement age, this is not something that is going to be interesting. However, retired homeowners can find that there is some serious money to be made here, it just comes with fine print, and explanations that require more elaborate definitions than the aforementioned.