A lot of people get their houses on a mortgage so the concept of a mortgage is very widespread and easy for one to get their head around. Reverse mortgages are a little more complex to understand but that’s what this post is for; we’re going to try and make it easy for you to understand and at the same time, we’ll try to clear out some common misconceptions around them as well.
A reverse mortgage allows retired home owners who qualify for it to borrow money against the value of their home. You have to be 62 years of age to qualify for this mortgage and the older you are after 62, the larger gets the sum you receive each month; although you can ask the lender for a lump sum as well.
The reason why reverse mortgages are a viable option for many people is because most retirees have complete ownerships of their homes; this means that their houses are their biggest assets and thanks to reverse mortgages they can receive money for their houses while maintaining ownership of the house in the meantime. Conversely, the reason why a lot of old people in need for some cash don’t resort to reverse mortgage is because there are many misleading myths about it.
A lot of people seem to think that if they resort to reverse mortgage, the lender will take the title of the home in question. However, this isn’t true since you retain ownership. Another big misconception is that the loan might become bigger than the property’s value, leaving a bigger debt for your heirs; this is also false because you’ll never have to pay more than your homes appraised value by the time the loan reaches maturity. Overall, reverse mortgages are definitely a strong source of income for the retired and elderly.