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November 22, 2016
Hungry for straightforward details about reverse mortgages? Curious as to whether you should consider one?
Here are 3 little known truths — often misunderstood facts — that will get you up to speed:
A reverse mortgage is actually a type of home equity loan. The amount borrowers can receive from the loan partly depends on how much equity is in the home. With a reverse mortgage, you are borrowing your own home equity. However, unlike traditional home equity loans, no loan payments are paid until the loan becomes due.
(You are required to have homeowner’s insurance, pay property taxes and keep up with the home’s regular maintenance.)
Reverse mortgages aren’t right for or even available to everyone. The first requirement is age; the borrower must be at least 62 years old, according to the Consumer Financial Protection Bureau. Also, the home must be the borrower’s primary residence. That doesn’t mean the owner can’t own additional property but the home with the reverse mortgage must be where the borrower lives most of the time.
A reverse mortgage lets you enjoy the equity you’ve got in your home, which can make retirement a lot more comfortable. However, as with any loan, it must be paid back eventually.
With a reverse mortgage, repayment is due when the borrower dies or moves away from the home.
You or your heirs will have choices:
After years of building up equity in your home, a reverse mortgage is one of the most accessible sources or retirement income — you can live the life you have hoped for during retirement.
Fewer than half of Americans are adequately prepared for retirement, but you don’t have to be among them. Take the first step toward a more secure future. Is a reverse mortgage right for you?
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