What Is A Reverse Mortgage?
I get many questions about reverse mortgages. The first one always is, “What is a reverse mortgage.” What happens when the money runs out? There is a lot of miss information regarding reverse mortgages. People often believe the house is no longer theirs or that their children’s inheritance disappears after a reverse mortgage.
A reverse mortgage usually is used as a means of income for retirees. People ask me all the time about reverse mortgages. A reverse mortgage is for the consumer who is 62 years old or older. It can provide guaranteed income during retirement.
The benefit of a reverse mortgage is that it can stop the mortgage payments. You would only be responsible for the taxes and the insurance on a monthly basis. Halting the mortgage payments is available, but you need some equity to be able to do it.
Sometimes I sit with families, and they’re only making $2,000 a month on Social Security. They struggle every month to make a mortgage payment.
I was able to help out a couple by doing a reverse mortgage on their property. The reverse mortgage paid the monthly mortgage payment. Plus, there was enough left over each month to give the couple $1,000.
Now people say, “Yeah, I don’t quite like that.” However, somebody’s got to pay that mortgage every month. Moreover, contrary to popular opinion, the house is still yours. So, if you decide to sell or refinance, whatever the equity is leftover is still yours.