Reverse Mortgages Demystified – Borrowing the Equity in Your Own Residence Can Provide Financial Security
September 7, 2007
Formerly known as reverse annuity mortgages, reverse mortgages are becoming more and more common in today’s estate planning and retirement planning scenarios. The reverse mortgage, a mortgage where homeowners convert the equity in their home into cash, while retaining ownership of their property, is fast becoming a very popular means for creating financial stability for the aging segment of our society. The beauty of this mortgage is that homeowners do not make monthly payments on the mortgage but instead receive them.
For older Americans, a reverse mortgage can deliver greater financial security to supplement Social Security income (SSI), meet unexpected medical expenses, obtain in-home care, make home improvements and repairs, travel, consolidate debt, buy a new vehicle, pay property taxes, and much, much more. The proceeds from a reverse mortgage are tax-free; there are no minimum income requirements, and the money can be used for any purpose that borrowers desire. This special type of home equity loan is not due or payable as long as homeowners occupy the home as their primary residence. Homeowners tap into the equity of their home; the equity in the home is then returned to the homeowners as needed, and the cash is tax-free.
Reverse mortgages are designed for either individuals and couples who are at least 62 years of age with moderate to significant equity in their homes. The only type of real estate that qualifies for a reverse mortgage is the primary residence of the applicant for the reverse mortgage. …
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by: Julie A. Dialessi-Lafley, Esq.