Hitting one’s retirement years in style remains a far-off dream for many seniors. Living on a fixed income that consists on a pension or social security benefits won’t leave much in terms of financial leeway. So, if your roof caves in during a storm, or you end up with a mountain of medical bills to pay or can’t make ends meet to cover your property taxes, finding a solution might seem hopeless.
If you’ve got home equity, though, you can use a reverse mortgage — the Home Equity Conversion Mortgage, also known as HECM — to get out of that tight spot.
Features of the Loan
A reverse mortgage, specifically, an HECM, allows seniors to convert part of the equity in their homes to cash . However, you need to be at least 62 years old to qualify. Also, the amount of money you can borrow can be subject to limits, depending on the appraised value of your home. Higher-value homes mean you get bigger payments every month. As for the interest rate, HECM loans are the only ones that offer fixed-interest rates, so you don’t have to deal with the effects of inflation on the rate. However, this is the option that provides you with the least amount of funds, so many people end up choosing the variable rates instead.
Benefits to Know
* Your cash advances aren’t taxed.
* You’re still the property owner, with the title deed firmly in your hands.
* Your cash advances don’t affect your Medicare benefits. Neither does it have any effect on your social security benefits.
* You can choose the payment method that suits you most: a lump sum, a credit line that allows you to withdraw any amount at any time, or cash advances for a given period or the rest of your life.
To find the best reverse mortgage quotes, make sure to shop around. That way, you can compare costs and fees to determine which one offers you the most value.