What better way to enjoy your retirement than to do that with money? Imagine what you could achieve, where you could travel to, and who you could spend your post-retirement lifestyle with – the opportunities are endless. You no longer have to clock in at work every day. This scenario is everyone’s dream. However, for some, it remains just what it is – a dream. How can you actualize this dream? There are several viable options, but one of them catches my eye beyond a reasonable doubt, which I will like to share with you in this guide.
Have you ever come across the word “reserve mortgage”? What does this term mean to you? Reserve mortgage or by it’s more formal name Home Equity Conversion Mortgage is not new, as it has been in existence since the 1960s. However, not many people know what it is, and it benefits their situations. Let’s proceed to find out more.
What Makes a Reverse Mortgage Unique?
Just like the traditional home loans, a reverse mortgage provides an individual with a financial stimulus to meet several needs. But wait! There is more to this. With the regular mortgage, you have to meet up with monthly repayments, and failure to do so puts you at risk of losing your home.
However, a reverse mortgage does precisely the opposite; it puts money in your pocket while keeping your home intact. Besides, you do not have to repay the loan immediately. The only time you get to repay the loan is if you decide to sell your home and relocate. Hence, you are not under any pressure to meet specific deadlines, as there are none. Nevertheless, here is the catch; the interest on the loan accrues over time, which means that you may find yourself paying more than you initially borrowed.
How to Determine Your Available Loan
Before taking a reverse mortgage, consider if it is an ideal option for you. It is easy to evaluate your eligibility using a reverse mortgage calculator. This evaluation tool factors in the age, condition, and location of your home, and also determines your creditworthiness in keeping up with the property taxes, insurance, and the cost of maintaining the home. Bear in mind that you can only access a percentage of your home value and not all.
What Are the Available Payout Options?
With a reverse mortgage, you can decide how to receive your funds. There are several options available to explore.
- Receive your payment as a lump sum – ideal if you have several pending financial needs to meet.
- Set up your payment as a credit line – ideal if you need to take a credit facility at any time.
- Receive your funds as monthly payments until there is none left in your balance – ideal for catering to everyday expenses.
What Happens to My Regular Mortgage
Before accessing your funds, you have to pay off your current home loan, as you can not have two mortgages at a time. Once you have cleared your current mortgage, you can use the remaining money to sort out your personal needs.
