5 Important Facts About Reverse Mortgages
A reverse mortgage is the type of mortgage that are used by people who completely own their home to release their equity. They are often used by people who find that their pension is not enough to give them an income and so they decide they want some extra money. They may also use them so that they can give some money to their family and watch them enjoying their inheritance while they are still alive. They can be quite complicated though and so it’s important to understand them before using one.
You Can Lose Your Home, but You May Not
It is possible that an equity release mortgage may put your home at risk. They are set up in a selection of different ways and so this will depend on which type of mortgage you decide to go for. It is therefore worth making sure that you completely understand how it works so that you can make sure that you know the terms. You may not mind losing your home, but you may do. It may be that downsizing might be a better option if you still want a house at the end or you may find some mortgages that provide this too.
You May Have to Pay Rent
Some reverse mortgages will give a large lump sum and then the company will own the house. The home owners may then need to pay rent to them. This may happen straight away or after a period of time. This does not happen in all cases though and so it is important to find out whether you will be expected to do this or not.
There are Lots of Different Types of Reverse Mortgages
It is very important to be aware that not all reverse mortgages are the same. Some have slight differences and others vary a lot. This means that it is extremely important to make sure that you are completely aware of the options available to you so that you find the one that is most suitable for you.
There May Still be Some Inheritance Left
Some people think that a reverse mortgage means that they will be signing their house over and there will be nothing left to inherit. This is not the case always and so it is worth taking a look at the different mortgage options available to find out what the terms are. Some will release just a small amount of money, which is repaid when the house is sold, but there will still be some left for the dependents. It may depend on how much equity is released and how much the house is worth as well as the specific agreement.
Once a Mortgage is Taken there may be no Other way to Release Equity
Some people feel that once they have got a mortgage on their property, they will not be able to release any more equity in it. This is not true though. This is because it may be possible to take a second mortgage or extend the original one. It may even be possible to sell the home and after paying back what is owed, take the remaining equity.
Never take chances with your mortgage especially with your first one, get professional advice from a licensed mortgage broker for your first mortgage to get the best rates.