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If you are cash-strapped and are 62 years of age or older, you may want to consider a reverse mortgage.
What are Reverse Mortgages?
Reverse mortgages are essentially the opposite of mortgages. Instead of you paying the bank monthly for your home loan, lenders pay you. They do this by taking a part of the equity in your home and converting it into cash. Usually the payment is tax-free and you don’t have to pay it back unless you move out, sell your house, or die.
You will still get to keep the title to your home when you get a reverse mortgage. It basically is an advance. Your social security and Medicare benefits will still remain intact.
Repaying Your Loan
Loans always need to be repaid somehow. In the case of the death of the last surviving borrower, the loan will be handed down to your spouse or your estate. In some situations, a non-borrowing spouse may still be able to live in the household.
Reverse mortgages are based on your home equity. This means that your heirs will receive fewer assets of course. With something known as the “non-recourse” clause, you can’t owe more than your home value when the loan is due and the house is sold.
Determine if a Reverse Mortgage is Right for You
If your situation demands it, a reverse mortgage might be right for you. A government-approved counseling agency can help guide you through the entire process. Make sure that you do not get scammed with a salesperson trying to push you to take out a loan. They will commonly have sales pitches that make reverse mortgages look like a solution to all of your problems.