Reverse Mortgage Payment Options
If you are happy and content with your home but want more money to live on in retirement, a reverse mortgage may be for you. If you are house rich but cash poor, a reverse mortgage allows you to tap into the equity in your home while you still live in it.
However, if you're like most older homeowners, you've worked so hard for so many years to eliminate a mortgage and get your darn home "paid for" that the thought of reversing that process and re-building the debt owed on your home is troubling. Reverse mortgages are also newer loan vehicles that few people understand. And most of today's reverse mortgage borrowers are low-income, single seniors who have run out of other money for living expenses.
Thus, it's not too surprising that people who don't fully understand reverse mortgages often have preconceived notions, mostly negative, about how they work. Federal law requires that reverse mortgages be non-recourse loans, which simply means that the home's value is the only asset that can be tapped to pay the reverse mortgage debt balance. In the rare case when a home's value does drop below the amount owed on the reverse mortgage, the lender must absorb the loss.
Like any other financial product, some reverse mortgages are good, many are mediocre, and some are just plain bad. Good reverse mortgages merit your consideration. A good reverse mortgage allows you to cost-effectively tap your home's equity and enhance your retirement income. So, if you have bills to pay, want to buy some new carpeting, need to paint your home, or simply feel like eating out and traveling more, a good reverse mortgage can be your salvation.