Reverse mortgages are available to homeowners at least 62 years of age or older. A reverse mortgage is one of several options available to older homeowners that allows them to take advantage of any equity that has accrued in their homes. In a reverse mortgage, the homeowner receives income from the home’s equity tax free without having to take on a new monthly payment. The payments work in reverse, with the homeowner receiving monthly payments from the bank.
Anyone who meets the age requirement and has enough home equity can take out a reverse mortgage as long as they live in the home. No payment is due on the loan as long as it is outstanding and the homeowner still occupies the home. The loan becomes due only when the homeowner moves out.
A reverse mortgage can be an attractive option but it is not the right option for everyone. Reverse mortgages have up-front costs and can be expensive to originate. Reverse mortgages also take away equity that the homeowner may need for future emergencies or health care costs. And, since proceeds from the sale of the home are generally used to pay back the loan, reverse mortgages can take away from any inheritance that would be left to surviving children. Consult an estate planning attorney to see if a reverse mortgage fits into your plans.
To learn more, visit www.newyorkelderlaw.com.