Live the Lifestyle You Deserve Using a Reverse Mortgage

Retirement sounds fantastic on paper, but in reality, it has its challenges, especially for those that don’t have other income streams to cater to their post-retirement lifestyles. You dream of that moment when you can travel the world, enjoy more time with family and friends, and even try something new. But everything requires money. As a result, not many retirees get to enjoy life after retirement. However, if you are 62 years of age or older and have a home where you reside permanently, there is a solution for you. You can increase your post-retirement income by applying for a reverse mortgage.

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What Makes a Reverse Mortgage Unique?

Unlike the traditional short-term loan that requires you to meet up with its regular financial demands or bear the consequences, you can acquire a reverse loan without worrying about losing your home or seeing your credit dip. While the standard loan takes away cash from your wallet, a reverse loan increases your income.

Before you qualify for a reverse loan, your lender will have to consider the following factor to determine your home equity: the current value of the home, your age, existing mortgage balance, and the interest rate. The lender will also evaluate your creditworthiness by using a reverse loan calculation tool. It is worth mentioning that your home can’t be used as a rented apartment or vacation home. Additionally, you can’t go on vacation for six months or more or stay away longer than 12 consecutive months.

You should also be able to pay your property taxes, home insurance, and maintenance cost. Failure to do so can result in your lender cancelling the loan and putting your home up for sale to pay the debts. If you have multi-story apartments, you must convert one of the units into your primary, permanent residence.

Types of Reverse Mortgages

Before applying for a reverse mortgage, understand that it is of two types – the private, single-purpose reverse mortgage and the Home Equity Conversion Mortgage (HECM). Private lenders like Wells Fargo provide single-purpose reverse loans to homeowners. On the other hand, HECMs are government-insured. In other words, they are federal-level loans. These government loans come with specific guidelines and protection.

You can’t borrow more than your home equity

If the lender shuts down the business, you can still access your loan

Your family and friends can be titleholders as well; this implies that they enjoy certain protections.

But if the single-purpose reverse mortgage and the HECM are not your choice loans, you can apply for the HECM for Purchase. With this reverse mortgage, you can acquire a new home.

What Else Should You Know?

Most retirees are left with little or nothing to fall back on after retirement. However, with a reverse mortgage, you can bring your dreams back to life without exposing yourself to many risks. Due to the flexibility it provides, it is difficult for a borrower to default on the loan. Once you are eligible for the mortgage, you can set up different payment options – monthly payments, a line of credit, or a lump sum. Some retirees combine two or all of these alternatives to get the best deal.

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