Reverse mortgages are a financial tool to help seniors stay in their homes and maintain their standards of living. A record number of such seniors are cashing in on the opportunity. However, while some believe reverse mortgages can be a cushion, they’re not for everyone.
Financial expert Terry Bloom says a reverse mortgage converts a homeowners equity into cash. Different methods for money come from monthly payments, an equity line of credit, or even lump sum payouts. While reverse mortgages can be a much needed source of cash for seniors, there are some things to consider before signing on the dotted line.
You must be at least 62 to qualify for a reverse mortgage. The amount you can borrow depends on your age, the value of your home, and your current interest rate and loan fees. Seniors don’t have to make any monthly loan payments until they move or sell their homes. The option is tax free and government insured. The fees range between 3.5 and 4.5 percent of the value of the home. Generally the older you are, the more equity you can pull out of your home.