Homeowners who are 62 or older can access money based on the value of their mortgage-free home. It is another word for a loan but it doesn’t have to be repaid until you sell your home or move.
A reverse mortgage means that you receive a certain amount of money that you can use to help your children buy a home, pay for college, or use for an amazing vacation. There are no monthly payments required. The interest is calculated when you sell or move and the principal becomes due.
This might sound tempting for some people but you have to consider what happens if you pass away. Very often, the surviving spouse is not allowed to live in the house unless they repay the loan. Most people in this situation end up selling the house so they can repay the money.
Before signing the papers for a reverse mortgage, make sure that you have discussions with different companies and see what they offer. Make a smart, informed decision that will benefit not only you, but also your family.