Aging homeowners who want to convert the equity they have amassed in their homes into a steady income - without having to sell their house or move - may find the answer they are looking for in a reverse mortgage.
That is, as long as they don't mind the expenses or the potential consequences to their heirs.
Available, in general, only to homeowners age 62 or over, reverse mortgages reverse the normal flow of payments on a home-equity mortgage. Instead of the homeowners making regular payments to the bank in exchange for a lump sum of cash, the bank makes payments (or extends a ready line of credit) to the homeowner in exchange for the bank's eventual claim on the home.
In other words, homeowners with a reverse mortgage never need to make another home mortgage payment until they die, sell their house or permanently move out of it. The bank pays them instead.
For homeowners, significant protections are built into the loans. Among them:
• Security: The lender can never force the sale of a home. The decision of when to sell or leave the home is entirely up to the homeowner.
• No debt risk: Homeowners and their heirs can never be forced to pay more on a reverse mortgage than the home is worth. If the eventual sale of the home doesn't cover the loan amount, the lender eats the shortfall. On the other hand, if the sale of the house yields more than the balance of the loan, the homeowners or their heirs can keep the difference.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125