Pay off Your Home with a Reverse Mortgage

It’s part of the American dream to be a homeowner. But for many people, home ownership is accompanied by a 30-year mortgage that takes a huge bite out of their income. If you are 62 or older, those monthly mortgage payments could be a thing of the past if you pay off your loan with a reverse mortgage.

What Is a Reverse Mortgage?

While a fixed-rate mortgage has a balance that decreases each month when you pay on principal and interest, the balance of reverse mortgages actually increases as you draw money. Proceeds from a reverse loan are paid as a lump sum or through installments. Some reverse mortgage loans are set up as lines of credit. The amount you can borrow is based upon your age, current interest rates, and a home appraisal.

One of the reasons these loans are so popular is because you can use the money for any purpose. So if you still owe money on your home, you can use a reverse mortgage to pay it off. The money you borrow won’t have to be repaid until you die or move.

Too Good to Be True?

You may be skeptical about reverse mortgages because they sound too good to be true. You may even have been warned about scams targeted at senior citizens. Yes, there are shady mortgage companies out there that you need to avoid, but reverse loan products are on the up and up. Take the time to find a reputable company that offers these loans.

However, there are pros and cons of reverse mortgages so it’s important to talk with a knowlegeable housing counselor who can give you all the facts about borrowing money this way. You won’t really know if a reverse loan is right for your situation until you evaluate the reverse mortgage guidelines and run the numbers.

This entry was posted on Monday, March 15th, 2010 at 6:54 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.