What Are Reverse Mortgages

By: Leebeattie
If you are a senior and have trouble living on your fixed income then you may need to think of utilizing a reverse mortgage to help with the ever rising cost of living. If you are like nearly all people living on a fixed income because the prices of food and gas are making it increasingly problematic to enjoy the life style you planned for during your retirement. Many are considering getting a part time job to help with cost but this can have a negative impact on your social security income and your tax returns as you may wind up owing taxes at the end of the year.

With reverse mortgages nonetheless you can attain access to extra money and it will not negatively touch on your actual financial situation. This type of mortgage is easy to qualify for and can help get you back to living in the style you had hoped for. Many consumers wonder what the difference between a reverse mortgage or a home equity loan is here is how each works:

Reverse mortgages, simply put, allow for you to apply the equity that you have in your home without experiencing to make monthly payments. A home equity line of credit also gives you access to your equity; however you will need to make payments each month on the amount that you borrow.

There are different factors that you should as well look at. For example with a home equity line of credit you need to show proof of income to your lender in order to qualify whereas with the reverse mortgage you do not require to as the lenders will obtain their money back when you or any one on the deed are no longer living in the home.

So, do you qualify for this type of loan? There are only a a couple of qualifications that you must meet to be eligible. First, you and everyone on the deed must be at least 62 years old. Next, you must own the property outright or you may have a real small mortgage left on the home. This property must too represent your primary residence and you need to be living there. This is all you need to qualify for this type of loan.

Once you qualify you can obtain your money one of several ways. You can obtain a lump sum payment, you can choose to make set monthly payments, or use a line of credit option. The important matter to think of with this type of loan is that you will never be tossed out of your home. The lender will hold off until everyone on the deed is no longer living in the household to collect their fees, principle and interest.

There are a few negatives that you may also want to think about and those are higher interest rates, and higher fees. Since you are not making any monthly payments on the loan and the lender may need to hold off years or potential decades to get repaid, they generally charge more interest than other types of mortgages. The closing fees are too more money than a typical closing maybe.

So if you find yourself suffering to really work at it to make ends meet, are at least 62 years old, and own your home, you should look at a reverse mortgage. Receiving this extra income can help you to continue the same life style and as most analysts will tell you that by the end of 2008 gas prices, on the national average, could be $5 or more a gallon let alone the increase in food prices.
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