[ Guest Post ] Money Matters: Retirement & Reverse Mortgages

Today I’m sharing something a little different. I enjoy doing posts on money saving as financial can be a worrisome & stressful area for many people, and the burden can be high for those with chronic illness. While I’d heard of reverse mortgages before, I had no idea what they involved. This post shows how they work & why it may be worth considering if you’re of retirement age and money is especially tight.

Reverse Mortgages : Qualification and Application

Retirement is usually fun, if you have the money and good health to enjoy it. However, when you struggle with medical bills or other major expenses, your golden years can turn into worrisome and stressful times. You might even have trouble being able to pay your regular monthly bills without the paychecks you used to get while working. One solution that can give you more money to spend is a reverse mortgage.

Reverse Mortgages : An Overview

Your first question might be “What is a reverse mortgage?” Unlike a traditional home loan, a reverse mortgage pays you. It is a long-term way to borrow money that comes from the value of your home without short-term implications. When you apply for a traditional loan you have ongoing scheduled repayments to make. A reverse mortgage allows you to not pay the loan back until you are ready to do so. Therefore, you can truly borrow the money and enjoy it free and clear for several years without an additional financial problem.

Figuring Out if Your Home Qualifies for a Reverse Mortgage

The first thing you need to do before you apply for a reverse mortgage is determine if your home qualifies for one. In order to qualify, the home must be your main residence. A vacation home does not count. If the home is actually an apartment building, you must live in one of the apartments and the total number of apartments must typically be no greater than four. Additionally, a reverse mortgage calculator app must be used to figure out if your home has a high enough value to borrow against. A reverse mortgage calculator is an online tool that uses special formulas to assess your home and establish the size of the loan.

Choosing How Funds Are Distributed to You

If you are at least 62 and your home also qualifies, the next step is determining how funds will be distributed to you. The reverse mortgage calculator establishes the total available to borrow. However, you are not obligated to borrow the entire available amount. You can opt to request a lump sum of a certain size. You can also choose to open a home equity line of credit. That functions similarly to a credit card, allowing you to borrow what you need when you need it, such as if a medical bill pops up that you cannot otherwise pay.

A common borrowing option is to set an agreement with your lender so you receive monthly payments of the same amount each month. Those payments continue until the total available is exhausted. That option differs from a standard home loan, which requires you to pay the lender back small portions each month. If you choose to receive monthly reverse mortgage installments, you do not owe any of those funds back for a long time.

Reverse Mortgages : Sources to Check When You Need a Loan

There are several ways to obtain a reverse mortgage. For example, you can visit a small local bank or a large bank chain. There are also government organizations, like the Department of Housing and Urban Development (HUD), that offer versions of reverse mortgages. They are called Home Equity Conversion Mortgages (HECMS). The most important thing when choosing a lending company is to pick one you trust. Ideally, it will be one you have done other business with in the past or one with a clearly positive and long-term reputation.

[ This is a sponsored guest post & as such the ideas expressed here are that of the author. ]