Get Monthly Income with a One Reverse Mortgage
Posted on July 14th, 2010
If you find yourself at the admirable age of 62 or above with the house of your dreams but very little cash to pay the bills, you may think you will be forced to consider selling the house and moving to a smaller house. There is another option though. You could get monthly income with a ‘One Reverse Mortgage’ and remain in your dream home. If you have no children you wish to leave the house to this may be the perfect solution. Even if you wish to pass down the home, it may work for you.
A reverse mortgage lets you tap into the equity in your home. The law does not permit reverse mortgages to be given to people under the age of 62. You also need to have substantial equity in your home for a reverse mortgage to make sense. As a rough guide you can expect to be able to get a reverse mortgage for up to half the value of your home if you own it free and clear. There are different options with reverse mortgages. You can receive it as a lump sum payment, as monthly payments or as a line of credit to draw on when you need it.
A reverse mortgage needs to be paid back when you move out of the house the mortgage is on, either because you decided to move or because you passed away. At that point you or your estate can sell the house to pay back the mortgage or refinance the mortgage. The title to the house remains in your name when you get a reverse mortgage. You are not selling your home when you decide to use this method to get monthly income. It is simply another investment tool. Fees are lumped in with your mortgage. Expect to get an inspection of your home. You will also be required to meet with an independent consultant to discuss whether a reverse mortgage makes sense for you.
The website for ‘One Reverse Mortgage’ has a fairly detailed description of the process you will go through to obtain a reverse mortgage. They also provide a calculator to give you an estimate of what you can expect to receive as a lump sum or monthly payment based on your home’s value, any mortgage you have remaining on the house and your age. The amount of money you qualify for is based on the age of the youngest person listed on the house title.
This is not a way to get out of taking care of your home. You are not selling your home when you a ‘One Reverse Mortgage’. You will still need to maintain it, pay taxes and insurance on it. In fact, it will probably be part of the reverse mortgage loan agreement that it is your responsibility to maintain that house in good shape.
No company wants to lend money on a deteriorating asset and you don’t want your walls to crumble around you either. Remember, you are looking at this type of loan because you want to stay in the home so expect to act accordingly and take care of it. Your children will thank you for it too. If the plan is to let your children inherit the home, they will have a much easier time refinancing a home that is in great shape than one that needs to be renovated to meet current building standards. For most people their home is their biggest investment. Getting a reverse mortgage is simply another way of allowing you to have some income while preserving title to the home you wish to keep.
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