Sunday 28 June 2020

Addressing Financial Challenges with a Reverse Mortgage

**Collaborative Feature**

Everyone dreams about spending their golden years in comfort, but often the stress, worry and anxiety of financial worries remains a worry throughout life, even into the later phases of our lives. Have you ever considered exploring what your options are if this does become a worry for you?

Today I am looking at and discussing why a reverse home loan is a possible solution for those of retirement age who might be looking for a financial boost.  

Private or government 
The loan could be acquired in one of two ways – via a government agency or through a private lender. If you opt for the government-backed option, it is known as a home equity conversion mortgage, but if it acquired through a private lender, it is a reverse mortgage. Both are subject to certain federal laws and regulations, so don’t be shy to ask your lender for assistance to ensure you fully understand what you are doing and make sure it is the best option for you and your situation. 

With any loan, the loan period or loan term is a huge consideration. A conventional home loan requires that you to pay back the loan at regular monthly intervals for a period that you and the lender mutually agree upon. It is important to be sure you know how you will pay this back to avoid any fees. charges or issues on your credit file. 

What do I need to do?  
A reverse mortgage gives you some breathing room, by allowing you to borrow money without the pressure of immediate repayments. In fact, there is no real loan period at stake, and you are not due to pay off the loan until you choose to end it, which will happen if you ever choose to leave the home that the loan is bonded to.   

It is not difficult to qualify for a reverse mortgage. You have to be 62 years of age or older, and you need to own and permanently live at the address of the house linked to the loan. The company where you apply for the loan is responsible for determining your capability to take out a loan. They will do a very detailed background and credit check on you, to see if you can afford all the other payments that will affect your borrowing capacity: property taxes, insurance coverage, maintenance and other running costs.  

Home is where the loan is 
The house itself has to be your primary, permanent residence, and the person applying for the reverse loan, who in this case would be you, has to be its legal owner. If the property is host to multiple residences, you would have to have at least one of the homes or apartments as your permanent residence. The value of the house has to be enough to cover the entire value of the loan if the property were ever to be sold. Whatever the balance is that remains at the end of the loan terms has to be settled using part of the money that was granted as part of the reverse home loan, before the remaining funds from the reverse loan can be used 

Your lender can let you have the money in monthly payments, which act almost like a salary would have; as a lump sum, to help you cover costs in the case of a major single cost, like hospitalization, being incurred, or you could receive the funds as a line of credit, and access as much as you need at a time, when the need comes up. 

Financial stress and worry is something this will probably affect us all at some point and it is so important that you seek neutral advice, help and information if you are worried or facing difficulties. The sooner you discuss this with someone, the sooner they can help and you can avoid slipping into difficulties. 


**This is a collaborative post.**

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