What is a Reverse Mortgage?

We’re pretty sure there are plenty of people who would like to increase their income once they’re in retirement. Well, if you’re a homeowner, there’s a way you can do just that without having to sell your home or move. It’s called a reverse mortgage.

What  is a reverse mortgage?

A reverse mortgage turns your home’s value into usable cash. Instead of you making monthly mortgage payments, the lender pays you fixed monthly payments for the rest of your life, a lump sum, or establishes a line of credit that can be used when you need it. You basically are annuitizing your home this way. As long as you or your surviving spouse live in the home or sell it, you don’t have to repay the principal, interest, or fees.

Who is eligible for a reverse mortgage?

To be eligible for a reverse mortgage, you must be at least 62 years old and the home you intend to reverse mortgage must be your main residence.

Should I be caution of a reverse mortgage?

There are a few things you need to be aware of before taking out a reverse mortgage on your home.

• You are still responsible for paying property tax, homeowners insurance, and all repairs your home may need.
• The costs that come with a reverse mortgage are typically higher than a traditional mortgage and can include a number of fees.
• Reverse mortgages also usually have higher variable interest rates that are not tax deductible like traditional mortgages.

If you believe it can help increase your income while meeting your lifestyle needs, you may want to look further into getting a reverse mortgage. However, if you are unsure if that is a good option, talk to your financial advisor for more advice.

At American Investment Planners LLC, we want to help you and your money stay safe, which is why we make it a priority to help you prepare for the best financial future possible. From managing your cash to 529 savings plans, we’re here to help with anything you may need. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.