A reverse mortgage can be a great way to use the equity in your home to your advantage. If you are 62 or older, own a home that you plan on staying in, and senior who wants extra income, a reverse mortgage may be the answer!
What Is Equity?
Equity in your home is the difference between what you still owe on your house and what your house is worth. For example, if your home is worth $350,000 and you owe $50,000, the equity in your home would be $300,000. If you no longer make a mortgage payment, then your home’s value is all equity.
Chances are the value on your home has gone up over the years, so don’t do the calculations based upon what you bought the house for. In the Denver metro area of Colorado, houses have gone up by 1.4% since last year according to Zillow. If you bought your house for $350,000 in the past year, that means that your home in Denver would now be valued at $354,900.
How is Equity Used in a Reverse Mortgage?
Think of the equity in your home as savings account you can tap into through a reverse mortgage. You can take out a lump sum at closing, or receive payments over time. If you want extra money to buy that RV you have been eyeing, or just want some extra cash flow per month, a reverse mortgage may be the way to go.
Will My Family Be Financially Responsible?
You don’t have to worry about your family having to carry the burden of your home. If the loan balance is higher than the appraised value of your home when you pass away, your heirs do not take responsibility. A reverse mortgage is a non-recourse loan. This means that no one will have to pay over what the home is worth. Mortgage insurance takes over this cost, not your heirs. If there is still equity in the home, then your heirs will receive whatever remains.
What Can I Use the Money From a Reverse Mortgage For?
You can use the money you receive from a reverse mortgage for anything you like. There are no restrictions as far as what you can and cannot use the equity in your home from a reverse mortgage. Maybe you want to use the money for an investment or perhaps you just want extra income to get help around the house cleaning. It is also good to note that the money from a reverse mortgage is not taxed!
How Do I Know if I am Eligible for a Reverse Mortgage?
If you can answer yes to all of the questions below then you are eligible for a reverse mortgage.
Are you 62 or older?
Do you own the house you will use in the reverse mortgage?
Do you live in your home for more than six months of the year?
Does your home meet the FHA standards for flood requirements and property standards?
Are you willing to still pay your property taxes and homeowner’s insurance?
Don’t Delay, Apply Today
If you answered yes to all of the questions above contact a mortgage lender that specializes in reverse mortgages. They can answer any additional questions you may have and get you on your way to having that additional income you desire!