Why Should I Invest in a Reverse Mortgage?
Curious about reverse mortgages? Learn what they are and why they may be the best investment for you.
Lately, senior citizens have been strongly encouraged to invest in reverse mortgages. The reverse mortgage program is sponsored by the federal government and is available to homeowners over the age of 62 who do not owe a significant balance on their current mortgages.
WHAT IS A REVERSE MORTGAGE?
The most common type of reverse mortgage pays you a fixed amount of money each month that you continue to occupy the home. The money does not need to be paid back until you move or die. Many seniors therefore depend upon reverse mortgage payments as a supplement to their Social Security and pension payments. Some seniors are reluctant to invest in a reverse mortgage because they mistakenly think that they will lose their Social Security benefits. Reverse mortgages do not affect other government programs such as Social Security, Medicare, and pension plans.
HOW CAN I USE THE FUNDS?
There are no restrictions on how you can use reverse mortgage funds. In general, you cannot use them to pay off an existing mortgage; the mortgage must be cleared before you can qualify for a reverse mortgage. In cases where you only owe a small amount, your first month’s payment may be used to pay off the balance of the mortgage.
HOW LONG ARE THE TERMS OF MY REVERSE MORTGAGE?
There are several plans you can choose from. The most common plan allows you to continue to receive payment as long as you remain in the home. You can also get a line of credit via the reverse mortgage program. Finally, if you prefer not to leave a large debt behind, you can get a reverse mortgage for a limited amount of time.
SHOULD I INVEST IN A REVERSE MORTGAGE?
If you do not plan to move, a reverse mortgage is an excellent investment opportunity. It gives you some extra income each month without adding to your debt and does not affect your Social Security benefits.
Send this page to a friend ...