For homeowners who have retired and are looking forward to enjoying the rest of their lives doing what they want with their free time, one common concern is income. Many of us have SSI or retirement funds to cover daily expenses and monthly bills, but there is always room for additional funds. A welcome surprise for some homeowners may be that their home itself can offer this added financial relief. By taking the market value of your home and converting it into a reverse mortgage, you can receive monthly payments that are yours to do with as you desire, be it funding trips, paying bills, or simply making life more comfortable, your options are limitless!
Why consider converting equity into credit?
There is some excellent general information about home equity conversion on this site: https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome
You can also reach out to a professional if you have questions, both real estate agents and special loan officers at financial institutions can offer you some insight about equity conversion and reverse mortgages. Regarding your finances and the value of your home, referring to an experienced person is crucial to making the best and most educated decision.
A home holds value in nearly any economy, and while prices may fluctuate, there are a few facts that make this an excellent option for those looking to bolster their finances. Take into consideration the bones of your home, the square footage, the bedroom and bathroom count, the living space, and especially storage: All of these things are dollars in your pocket when converted to a reverse mortgage.
Value in your home can fund your future ventures
Equity in homes comes from the natural market value and can be improved with renovations or additions to a home. Upgraded appliances and fixtures, newly added bathrooms or bedrooms, or renovated spaces made into functional living spaces are all ideal features for a home’s equity to rise. By weighing the pros and cons of a home equity conversion mortgage you can review what freedoms and concerns that can accompany the choice.
Even if you’ve made no changes to your house, if it has the fixtures and appliances it came with when you bought it, there is likely plenty of value within its walls to give you a comfortable monthly income with funds from the equity. What decides the amount you’ll be offered for this line of credit is the market value of your home. Closely watching market changes and trends, an expert can advise you best on how to get the most money from a reverse mortgage. Using the loan to cover recurring bills or medical expenses, or to pay for travel and lodging for a vacation, you’ll have the financial support you need to live life rather than worry about how to pay for it.
Things to bear in mind
For homeowners specifically 62 years and older, a reverse mortgage is an excellent option for getting a little (or a lot) extra cash flow to support you and your loved ones. Taking a trip to visit places you never have and have always wanted to, or just a short flight or drive to see family who lives out of state, you can feel more enabled to travel with the monetary cushion of a reverse mortgage. Cash from the line of credit can go to the costs of education for grandchildren or help with the expenses of new hobbies you may be undertaking now that you have free time to yourself.
While it is important to keep in mind that this is a loan that needs repaying, you can rest assured that if you aren’t able to or wish not to pay it back out of pocket, you can have the option of allowing the future sale of your home to pay back the converted equity mortgage. Rather than leave behind a debt for your family to worry about, the value of your house can close out the loan.
There are some requirements for approval, which you can see more information on at this link. Not everyone is offered the same loan amount or rates, but with the advice of a professional, you can rest assured you’re getting the best option for your life and plans.
An educated real estate agent can give you some insight into how to go about getting the process started. You can also reach out to a loan officer at any financial institution for details and to begin the application and conversion process. Much like getting an appraisal before making an offer on a house when looking to buy your forever home, you will need to know what the current market value is. This is what will give the loan officer the information they need to form a proper offer to convert the equity in your home into monthly payments into your bank account!