There are many ways to use the equity in your home for your benefit while still ensuring that you can live in your home as long as you like. One of those options is a reverse mortgage. A reverse mortgage uses the equity in your home to provide you with either an income stream or a lump sum to use as you wish.
If you have monthly expenses that exceed your income and are over 62 years of age a reverse mortgage could help. The income stream that you could receive from the equity in your home can supplement your monthly income and allow you to live more comfortably.
If you have some debt that is keeping you from being able to live comfortably on your current monthly income you could use the reverse mortgage to get a lump sum to pay off or settle your debts. This tool can avoid bankruptcy or lawsuits for collection of the debt.
If you choose to apply for a reverse mortgage you must have sufficient equity in your home based upon your age to qualify for the loan. One of the persons on the title has to be at least 62 years of age. Once you have qualified for the loan, you do not have to pay it back during your or your spouse’s lifetime. You can live there until you die or need a more supported living arrangement. If your heirs want to keep the house they will have to pay off the reverse mortgage. If they don’t choose to do so the bank will take the house and sell it to get the money lent to you during your lifetime.
A reverse mortgage fully encumbers your home so you cannot take other lines of credit against it. Further, if you need to qualify for Medicaid your home is fully encumbered and cannot be used as an asset available to you to pay for your care. Any creditor who has a judgment against you can only attach it to your home in line after the reverse mortgage so they cannot foreclose on your home.
A reverse mortgage is not for everyone, and it is not a decision to be made lightly. Moseman Law Office can help you determine if this option is the best for you in your current situation.