Using a Reverse Mortgage to Access Cash You Need

Retirement is supposed to be fun, right? Whoever said that obviously did not live in an era when socking away enough money to use when you retire is incredibly hard. However, if you are a homeowner, you may be able to make it fun again. A reverse mortgage can allow you to do that by letting you take money from your home’s value.

The Freedom of a Reverse Mortgage Agreement

Freedom is a major concern, especially financial freedom. A reverse mortgage provides that by letting you borrow and spend without immediate hindrance. While a traditional mortgage comes with a traditional mortgage bill, a reverse loan lets you stay mortgage bill-free. Stay in your home, meet the demands of the loan, and you do not have to worry about repaying the full amount or any part of it in the near future.

Borrowing Regulations You Must Prepare to Meet

One small downside of a reverse mortgage is your total home value is not indicative of the amount you can freely spend. An online reverse mortgage calculator is necessary to come up with that figure. The reason you need to use one is government limits exist on how much a reverse loan lender can give you. When the reverse mortgage calculator takes those rules into account, it can give you a more accurate idea of how much you can really access.

Exploring Types of Reverse Mortgage Lenders

Another thing to do when using a reverse mortgage to access the cash you need is choose your lender wisely. A reverse mortgage calculator can tell you about government rules, but its use does not mean your mortgage is fully government-insured or regulated. For that, you need to select a lender that is affiliated federally, so be sure to check out those options. Many federal agencies and departments offer such home equity conversion mortgages. You can easily find some by speaking to the Department of Housing and Urban Development or a similar agency.

The other alternative you have is applying for a reverse mortgage through a private lender. Known as a proprietary reverse loan, such a mortgage often has less strict rules. However, it also is not backed federally. Additionally, a proprietary lender gets to set its own rules, other than being required to adhere to a range of government limits. The advantage of making a deal with a proprietary lender is you can do business locally. You may even know the people with whom you are dealing. You also may have a positive history with the institution itself that can help you during the qualification process.

Reverse Mortgages and Traditional Mortgages Held Concurrently

If you have a traditional mortgage already, a reverse mortgage is not out of reach to you. In fact, you may easily qualify for one. However, special circumstances do apply. The first is that you cannot maintain both concurrently over a long period. Funds out of your reverse mortgage are required to pay the traditional loan balance immediately. As a consequence, the second issue is you may not have enough funds remaining after that to do much with. However, you will at least no longer have an ongoing mortgage payment to make, which can relieve some financial stress.

The Nuances of a Reverse Mortgage Contract

Despite being governed by the same basic laws and eligibility requirements, such as being at least 62 years of age to apply, not every reverse mortgage contract is identical. Always explore the nuances. Read the fine print of any paperwork you plan to sign. Make sure you know exactly how your reverse mortgage will affect you. When you feel comfortable and sign on the dotted line, you can look forward to years of financially stress-free retirement life.

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About Lanna World

About Lanna World

Lanna World is a travel blog mixed with a lifestyle blog. Sadly I can't be traveling all the time, so while I'm at home - saving for travel - I'll write lifestyle posts. Right now, I'm living in New Zealand, planning to travel to Europe at the end of 2015. I can't wait.

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