At one time, there were only two ways to tap into the value of your home:
Sell your home
BUT… then you would have to move somewhere else.
Borrow against the equity in your home
BUT… then you would have to make monthly loan repayments.
Many people have retired with what they assumed would be a comfortable retirement income into the future, only to find that inflation, rising health care costs and unexpected expenses have worked to make their retirement less secure. These people may have substantial equity in their homes…equity they would like to convert to cash without having to move or assume debt that has to be repaid.
A reverse mortgage, which converts a portion of a home’s equity into cash without requiring that the home be sold or that the equity be repaid currently, may provide the answer.
What Is a Reverse Mortgage?
A reverse mortgage is a loan against the value of your home that does not have to be paid back for as long as you live in the home. Simply put, a reverse mortgage converts some of the equity in your home into income.
The proceeds from a reverse mortgage can be paid to you:
•In a single lump sum;
•As a regularly monthly income; or
•At times and in amounts of your choosing.
While reverse mortgages typically require no repayment while you are living in your home, they must be repaid in full, including interest and any other charges, at the earliest of:
•The death of the last living borrower (meaning that a surviving spouse may continue to live in the home without repaying the reverse mortgage);
•The sale of the home; or
•The last living borrower moves permanently away from the home, such as to an assisted living facility or nursing home.
Think long and hard before moving forward on a reverse mortgage while exploring other options such as an out right sale or finding a less expensive place to live.