As the name suggests, a reverse mortgage loan is a loan taken against your house. You'll be paid a certain sum of money at predetermined intervals, and in exchange the lender will claim possession of your house when you move out or pass away. You're eligible for a reverse mortgage loan if you're 62 years old or older, and you must live in the home you're mortgaging. Here are three reasons you might want to get a reverse mortgage loan.
1. Your house has a high market value
The amount of money you'll receive from a reverse mortgage loan depends on the value of your house. Lenders will be willing to offer you more money for a home with a high market value. Take this into consideration when deciding whether or not it's worth reverse mortgaging your house.
2. You have no one to leave your house to
Some people decide that they'd like to leave their house to family or loved ones when they're gone. However, if you don't have anyone to inherit your house, you may decide that a reverse mortgage loan is a good idea. You can get some extra cash to use during your retirement years, and your lender will take possession of your house when you die. However, if you do wish to leave your house as an inheritance, you can still take out a reverse mortgage loan. In this case, the intended recipient of your house can decide whether to pay back the reverse mortgage loan and inherit the house or give it up to pay the remainder of the debt.
3. You need money
Of course, the most compelling reason for you to take out a reverse mortgage loan is because you could use the money. There are different kinds of reverse mortgage loans, and each can suit your needs depending on your particular situation. According to Reverse.org, you can decide to take your reverse mortgage payments monthly, either for the duration of your life or for a set number of years. This is a good option if you're retired and trying to cover living expenses. If you need the money for a specific goal or to pay off a large debt, you may want to take a lump sum payment instead.
A reverse mortgage loan can be a low-risk way to get money to use on things that matter to you. Use the equity you've built up as a homeowner and make it work for you. If any of these described scenarios sound like your life, you should look into reverse mortgaging your home today.