Only one thing beats the thought of retirement, and that is retirement with enough money to live life your way! If the conundrum of how to get some extra cash into your possession during this time is a current thing for you, keep reading for more about help in the form of a reverse mortgage! Also known by its other name, a retirement home loan, it is a great financial solution for the retirement years. For once, something that sounds too good to be true, is realistically true!
Let’s talk about the basic concepts
To be clear: a reverse home loan is still a loan, and every loan still comes with its own set of terms and conditions. It also means that standard legal conditions will be valid, and that interest on the money you borrow is an inescapable factor. Although this particular kind of loan lets you forego monthly payments, you will be obligated to pay back the full amount at the end of the loan period. If you find that you are unable to do so when the time comes, the house will be sold to make up the costs to the lender. This is standard, and you should be clear that you understand this upfront.
This is where the value of the reverse mortgage calculator comes in. This handy tool is used by lenders to determine the value of your house when you apply for a reverse home loan. Factors like the age, condition and location of the house all come into play during this evaluation process. Bear in mind that there are laws in place that cap the amount you are legally allowed to borrow, so the reverse mortgage calculator is also useful in calculating what percentage of your home’s value you may borrow, based on your current financial standings.
Show me the money!
Once the reverse mortgage calculator has done its thing and your lender has approved your application, you will have to choose in what form you would like to receive your money. You do have options! The first is to have it all paid over in one lump sum, with no further claims to payouts. How you manage the large amount will then be your responsibility. You could also access smaller amounts you need, as the need for them comes up, in a line of credit, or you could arrange for regular monthly payments, which is the most popular choice. The latter allows for budgeting and predictability, which is what people like about it.
The one major thing that sets reverse home loans apart from regular loans, is the fact that you do not have to make regular monthly paybacks. The very design of the loan is intended to help you supplement your finances during retirement, and you will not need to pay any money back, as long as you live in the house full-time. People love a reverse home loan for its flexibility, as they often feel that they have more control over the loan period and their liquid cash.