Keeping up with finances in this fast-paced era is no easy task. It is especially difficult if you’ve retired and are trying to survive on a very strict budget. Under such circumstances, even a little bit of help can go a long way. A reverse mortgage is one option that can ease your financial stress and help you stay afloat. Most senior citizens remain unaware of this opportunity, but Pastor Tommie Harsley emphasizes that if used correctly, this facility can significantly help lower your burden.
What Is a Reverse Mortgage?
A reverse mortgage is a loan that allows senior citizens to borrow against the equity in their home, allowing them to receive funds as a lump sum, fixed monthly payment, or line of credit. The loan does not have to be repaid until the borrower dies, sells the property, or permanently moves out of the home. There are several types of reverse mortgages, but the most common is the Home Equity Conversion Mortgage (HECM) – insured by the Federal Housing Administration (FHA).
Who Can Get a Reverse Mortgage?
In order to qualify for a reverse mortgage, you must be at least 62 years old and own your home outright or have a low mortgage balance which individuals can pay with the proceeds from the reverse mortgage. Additionally, you must occupy the property as your primary residence.
How Does a Reverse Mortgage Work?
A reverse mortgage works by using the equity in your home as collateral for a loan. The amount of money you can borrow depends on several factors, including your age, the value of your home, and the interest rate. The loan does not have to be repaid until you die, sell your home, or move out permanently.
What Are the Benefits of a Reverse Mortgage?
According to Pastor Tommie Harsley, there are several benefits of a reverse mortgage, including the following:
- You can stay in your home and maintain ownership.
- The loan does not have to be repaid until you die, sell your home, or move out permanently.
- You can use the money from the loan for any purpose.
- The loan does not depend on your income or credit history.
- You will not have to make monthly mortgage payments.
What Are the Disadvantages of a Reverse Mortgage?
There are also some disadvantages of a reverse mortgage that you should be aware of, including the following:
- The interest on the loan will accrue over time, which can erode the equity in your home.
- If you move out of your home permanently or sell it, you will have to repay the loan in full, plus any interest that has accrued.
- You may have to pay for mortgage insurance if you do not have enough equity in your home to cover the entire loan amount.
- If you die or move out permanently, your heirs may have to sell your home to repay the loan.
Is a Reverse Mortgage Right for You?
Pastor Tommie Harsley believes that reverse mortgages can be a helpful tool for some senior citizens who are struggling to make ends meet. However, it is not right for everyone. Be careful to weigh the pros and cons or consult a professional advisor before deciding if a reverse mortgage will work well for you.