Sudden medical costs or home repairs can make for a crummy financial situation. That’s especially true if you live on a fixed income, which is typically the case when all you have to rely on are your social security benefits and pension. Good thing there are many retirement tools you could explore to help, one of these being reverse mortgages.
What is it?
It’s a type of loan that allows you to trade your home equity for cash.
How does that work?
Well, most loans work by you sending money over to the lender every month. The opposite is true in this case. The lender sends you the money instead.
Do I have to pay for anything?
You don’t have to pay the lender on a monthly basis. However, there are upfront costs you’ll have to shell out money for. These typically include lender’s fees along with closing costs.
Will it affect my Medicare or pension?
No. However, it could affect your Medicaid, so make sure you check. Your Supplemental Social Security Income could be affected as well.
What do I need?
Age, your home’s value and your ability to pay off your bills matter, says Investopedia. You have to be at least 62 years old before you can apply for this loan. Then your home must be your principal residence. That means, if you have any plans to leave this might not be the right solution for you. Also, you must be capable of paying off your property taxes as well as homeowner’s insurance. Your budget must cover your home maintenance as well.
Where do I start?
Scout around for prospective reverse mortgage companies. Do your research and when you have what you need, compare rates and costs. This should be handy in helping you pick the right lender to go for.
