Enjoy Your Money NOW!
Maybe you’ve seen an ad on TV or gotten a letter in the mail about reverse mortgages. But is it a smart financial decision? This introduction to reverse mortgages is a first step toward deciding whether it could benefit you.
What is a Reverse Mortgage?
Simply put, it’s the opposite of paying down a traditional mortgage. Rather than send in a payment to the bank, the bank pays you. The money you receive is borrowed against the equity in your home, and you pay it back when you leave your home permanently. Reverse mortgages are exclusively for people age 62 and older and are a particularly good option if you intend to remain in your home for many years.
What are the Benefits?
The most notable benefit is the opportunity to enjoy the money from your home while also continuing to live in your home. It’s tax-free and can be used for any purpose. So all of that wonderful equity you’ve built up over the years could become a travel fund, help the grandkids with college, or whatever would make your retirement years better. Some reverse mortgage recipients use the money to:
- pay medical expenses
- pay off the rest of their mortgage, thus lowering monthly expenses
- hire outside assistance (home health aides, housekeeping) or update the accessibility of their home to eliminate the need for a long-term care facility
What’s the Process?
It’s a lot like getting a mortgage, except without any income requirements. After you apply, you’ll get a home appraisal and then pay fees like closing costs. One note: In-person counseling with an unbiased financial pro is mandatory for people considering a reverse mortgage. The government requires counseling to ensure that potential clients thoroughly understand this very important decision.
Will I Still Own My Home, or Will the Bank?
You will still own your home. A reverse mortgage simply gives you access to the equity in your home to use now. As long as you continue to pay property taxes and homeowner’s insurance and maintain the home—things all homeowners must do—you can never be forced from your home. You also must live in the house at least 183 or more days a year; to be eligible for a reverse mortgage on a property it must be your primary residence.
We invite you to contact Bank of Oak Ridge to find out whether a reverse mortgage is right for you.