Determining Your Eligibility for a Reverse Mortgage

We all love to retire and spend more time doing what we love, except you still prefer your nine to six job or don’t want to lose the paycheck. The latter occurs when there is no financial safety net after retirement. From the moment you tender your resignation letter, be prepared for what comes next, one of which includes a drop in income. But if you have assets that generate multiple income streams, good for you. Otherwise, you may have to consider sourcing for money. Standard loans sound nice, but they leave you high and dry in the long run. Any other choice? Of course, a reverse mortgage.

Understanding What a Reverse Mortgage Means

As I stated before, traditional loans have their challenges. For one, you have to meet strict deadlines or face the consequences, of which may include a dip in your credit score or, even worse, a foreclosure. You wouldn’t want that. A reverse mortgage offers you the same financial benefits but with fewer problems. You can pursue any goal with the money you get and pay back whenever you want. There are some requirements to meet before you qualify for this loan.

Here’s the quick break down on how reverse mortgages actually work – first, you should be 62 years of age or older and have a primary, permanent residence. Another area to consider is your home equity – it should be enough to meet your loan request. Besides, you can’t borrow your total home value, as stated by federal law. You can only access a specific percentage. Hence, if your apartment does hold much equity on the market to meet your needs, you should consider other options. Your lender will determine these factors, and more, using a reverse mortgage calculator. They will assess your age and financial background as well.

Are there Costs I Should Cover?

Before you access your funds, the lender will ensure that you don’t have an outstanding mortgage. If there is one, then you have to pay it off first. Additionally, there are closing costs and fees as well. Once you’ve sorted these out, you can receive the remaining money to do whatever you want. There is new legislation that allows you to repay your loan on time. But this comes at a cost. On the other hand, you can defer payments to any time of your choice.

How Can I Receive My Reverse Mortgage Funds?

Once you qualify for a reverse mortgage, you can decide how to receive your money. There are several ways to set it up. One option includes opting for the monthly payment plan. You earn money in the form of paychecks, just like you did during your working years. You can also create a credit line, where you get to receive credit whenever you want; this works like a credit card. But bear in mind that there is a limit to the amount that you can borrow. If you have multiple expenses or goals to address immediately, you can go for the lump-sum payment option. With a reverse mortgage, you no longer have to worry about living an ideal post-retirement lifestyle.

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