Posted on: 22 September 2019
When you were younger you may have had high hopes to purchase a home, settle down with your spouse, and raise your children. Now that many years have passed and you have retired from your job, you may have found that it is difficult to make ends meet by relying solely on your retirement funds. You and your spouse can take out a reverse mortgage loan to relieve the financial burden that you both are facing.
Why Consider A Reverse Mortgage?
Most loan products require an applicant to be gainfully employed in order to receive approval. Since you and your partner are retired and you are living on a fixed income, neither of you would qualify for a standard loan. If you took out a home equity loan, you would be responsible for making payments soon afterward. With a reverse mortgage loan, you do not have to be employed and the money will not need to be repaid immediately.
In fact, this type of loan is only available to seniors. Over the course of your adulthood, you and your spouse paid mortgage payments. These payments accrued and built up equity. This equity is what you are able to borrow, through a reverse mortgage. Let's say that your home is paid for in full. You would be eligible to borrow the entire amount that was paid in. Now, let's say that you still owe on your home, but have paid a decent chunk of the mortgage.
The amount that has already been paid will be the amount that you will be able to borrow. The best part is that the money will not need to be paid back until you sell your home, move out of your home, or pass away.
If both you and your spouse's names are listed on the deed of the house, then both of you will be responsible for filling out the application for the reverse mortgage loan. In this case, the loan and interest fees will not need to be repaid until both of you have sold the home, moved out, or passed away.
How Could This Affect Your Heirs?
Do you plan on adding your children to your will? They will not inherit your home unless the reverse mortgage loan is satisfied. Of course, if there is still equity remaining and your children decide to sell the home, they can split the difference after the loan is paid in full. If any of your children would like to use the home as their primary residence, they will need to use their assets to pay off the loan, prior to being able to acquire ownership of the residence.Share