Ever heard of a reverse mortgage? Reverse mortgages allow people who have value in their homes to receive cash loans.
Reverse mortgages are only available to people:
- Who own their home
- Who are 62 years of age or older
Reverse mortgages are designed for older Americans who own their home. For people in retirement or approaching retirement, the majority of their wealth is often tied up in their home. Reverse mortgages make more of this wealth liquid. When setting up reverse mortgage, the cash can be paid:
- In one lump sum
- In monthly payments
- As a credit line, allowing access when needed
Typically, reverse mortgages need not be repaid until the recipient moves from their home. This means that there are no monthly payments.
But there's no such thing as a free lunch. Unlike a typical mortgage—where your home equity rises and your debt rises—in a reverse mortgage, your home equity declines and your debt rises. The exchange of equity for cash lasts until the owner moves out of the home.
If you are considering a reverse mortgage, visit the AARP's website for more information.