When you think of a reverse mortgage often the implications of it do not come into view, like what happens to the equity in a reverse mortgage home. Before you consider a reverse mortgage on your home, you need to investigate all possible avenues that could affect your financial future as well as the financial future of your loved ones.
How Is The Equity Affected In A Reverse Mortgage Home?
Taking out a reverse mortgage on your home can have a negative impact on the equity that you may have built up over the years. You are basically using the equity in your home to help you out financially. Unlike a traditional home loan or second mortgage, a reverse mortgage uses the equity in your home to pay you in either a lump sum payment or monthly payments, and you do not have to worry about paying it back.
Seniors who are 62 years of age or older qualify to take out a reverse mortgage. The only time that the reverse mortgage needs to be repaid is if the home is no longer used as the primary residence or the homeowner moves or dies. If all the equity in the home is not used, it goes to the heirs of the deceased homeowner’s estate.
Things To Consider About Equity And Reverse Mortgages
Reverse mortgages deplete the equity in your home, and often you may not have enough equity built up to get a decent payment amount. Depending on your financial situation, you must consider if a reverse mortgage company in Denver will be feasible for you. Also, consider if your home is paid for or not. If your home is paid for and you have made mortgage payments for 30 years or more, you will have a nice size equity built up. But if your home is not paid for, the reverse mortgage will pay the remaining balance on your home and give you money from the equity in your home which may not be much . Be careful however of closing costs as these fees can be rather expensive, and they are either added to the cost of the loan or you pay them out of pocket.