Like most people, I have been looking forward to my retirement for many years. However, even after years of planning, I felt like I still wanted to enhance my financial portfolio so that I could have the income that I needed to live comfortably and without worry. This is why I decided to get a reverse mortgage.
If you’ve never heard of a reverse mortgage before, you may be wondering what it is. Put simply, a reverse mortgage is exactly what it sounds like: instead of making monthly payments on the value of your home, you will receive a check from a lender. The money is drawn from the equity of your home, and you can receive it for as long as you live in there.
Reverse mortgages are best for people like me (who are retired or nearing retirement age) because it is a way to reap the benefits of all the hard work we have put into a lifetime of looking for low mortgage rates and making housing payments. I use my reverse mortgage to make costly home repairs when I need to and to cover my day to day expenses to make sure that I can still afford everything that I need and most of the things that I want.
How you receive your reverse mortgage payments is entirely up to you. I chose to receive mine in monthly payments because I use it to pay some of my household bills. I will get those payments for as long as I use my home as my primary residence. However, other people who receive monthly payments from their reverse mortgages choose to put a fixed term on them, so that they will stop receiving payments after a certain amount of time. You can also use your reverse mortgage as an additional line of credit that taps into the equity of your home.
When it comes down to the nuts and bolts of getting a reverse mortgage, though, there are some things that I wish I had known about the reverse mortgage at the beginning of the process. Firstly, since the home is still in my name, I still pay property taxes myself. I also had to pay an origination fee when I signed for my reverse mortgage. And much like buying my very first home, I needed to shop around to find the best mortgage rates.
When it comes to repayment, the loan on my reverse mortgage isn’t due until I pass away or until I move out of my house. However, I’ve chosen to make voluntary interest payments on mine. You can choose to repay the entire thing at any time, or your surviving family can repay it after your house is sold. They will have up to a year to do so.
However, these factors wouldn’t have changed my decision overall. My reverse mortgage has been a great way for me remain independent and stay in the home that I’ve invested in for the past several decades.