Reverse mortgage is an option for retirees
By Scott Lunsford
Many retirees have to go back into the work force after retiring to make ends meet. The average monthly income for a retired person is only $750, and that is just not enough to enjoy the lifestyle they had hoped for.
If you are reluctant to move after you retire, but find living in your home costs more than you can afford, you should consider a reverse mortgage.
A reverse mortgage is a safe and easy way for people older than 62 to tap into the equity in their home, thereby creating an additional source of income.
A reverse mortgage is a loan so it does not have any effect on Social Security income.
The proceeds can be used any way the owner wants. Many retirees use the additional money for travel or home repairs or to purchase long-term care of life insurance. The money can be received in either a lump sum, a monthly payment, or a line of credit. The money is received free from taxes and comes due only when the homeowner dies, decides to move or sells the home. Many people purchase a life insurance policy with some of the extra income, thus the heirs have a tax-free lump sum of cash to eliminate some of or the entire loan. The loan value never can be more than the value of the home.
The reverse mortgage provides financial security for homeowners and improves their quality of life. Home ownership is retained, and there are no income qualifications, no credit checks, and no medical qualifications.
Think of a reverse mortgage as the opposite of a conventional mortgage.
Instead of using income to gain home equity, the borrower is using home equity to increase income.
A typical reverse mortgage might work this way: A couple of 70 and 68 years old with a home appraised at $200,000 could receive a monthly income of approximately $700.00 as long as they live in the home, receive a lump sum or have an open credit line of about $115,000. This "found" money could really help today's retiree, and at the same time take the financial burden from the children who might otherwise be forced to help their aging parents with the necessities of life.
Pull out the equity and still live in your home -- in other words, have your cake and eat it, too.
A reverse mortgage is a powerful financial tool. If you are committed to staying in your home, a reverse mortgage could be right for you.
Source: Chillicothe Gazette
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