If you don’t have enough money saved away for retirement, you’re likely to run into significant financial headwinds. The rising cost of medication and medical bills can bleed you dry and cause your finances to take a beating. Without a source of income, you might have trouble meeting financial obligations.
If you happen to be in such a situation, you don’t have to lower your standards of living or trouble your kids for upkeep. You can leverage your equity in your house and have a ready source of cash whenever you need it, reverse mortgage lenders suggest.
Easy Access to Cash
A reverse mortgage is credit facility insured by the Federal Housing Unit that is available to homeowners who are at least 62 years. It enables seniors to turn their home equity into cash without monthly repayments. These loans also don’t have a definite repayment period.
The debt becomes due six months after the youngest name on the title passes on or moves out of the home. With the cash you receive, you can meet your living needs as well as pay taxes and insurance on the property. You can use the money to keep the home in perfect condition and repair any damages.
Inheritance for Your Children
Six months after your demise or moving out and the loan becomes due, your heirs have the option of paying up the loan or putting the home for sale to offset it. If they opt to put it on the market and it sells for more than the amount owed, they get to keep the balance.
As such, you can have your home take care of you during retirement without jeopardizing your children’s inheritance. Since a reverse mortgage is a non-recourse loan, your heirs will never owe more than the loan should the home sell for less than the loan amount.
If you’re having financial hardships, you can cash in on the equity in your home and improve your position. With a reverse home loan, you’ll have ready access to cash and improve your life.