What are Reverse Equity Mortgages?
Many seniors are looking into reverse equity mortgages today because of the benefit of additional funds for living expenses, medical bills, increased financial stability, and even home improvements or vacations.
We did some research for our Dad and found out quite a bit about them. Thought I would add this to the discussion.
A reverse equity mortgage is just another name for a reverse mortgage. This type of mortgage is also commonly referred to as a home equity conversion loan. You have to be 62 years old or older to apply.
This type of loan basically enables the homeowner to convert some or all of the equity that has accrued in their home into monthly payments, or other payment options in order to help boost living conditions and financial stability, especially to seniors living on a fixed income.
Basically, the reverse equity mortgage provides loans based on the amount of equity that has built up in the home, and contrary to other traditional home loans, doesn't need to be paid back as long as you remain in the home.
However, you should know that the repayment of the loan will be due if you move out, sell the home, or die. Home loans of this type are structured so that any loan amounts don't exceed the home equity value at the time of the loan.
You need to know that in some cases, the home may be taken over by the bank upon the death of the homeowner unless the repayment is made in a timely manner.
One of the greatest benefits of a reverse mortgage is that it's tax-free and doesn't revolve around income requirements or restrictions.
Most times, the payments offered through a reverse mortgage will not affect your Medicare or Social Security benefits. If you're considering the potential of reverse equity mortgages of any kind, read the fine print and understand all the terms, positive and negative, before signing on the dotted line.