If you're a senior who owns a home that is paid off—or almost paid off—it's worth considering getting a reverse mortgage. Also referred to as a Home Equity Conversion Mortgage (HECM), this type of mortgage is not for people who want to buy a home, but for those who already own one and want to access some or all of its equity. So, if you're looking for a way to get money from your home without first selling it, check out the reverse mortgage benefits you can look forward to.
1. You Can Get Rid of Your Mortgage Payment
If you currently have a mortgage payment on your home, getting a reverse mortgage can eliminate it. In fact, your lender pays you, giving you the money you need to pay your other expenses, travel or simply enjoy some financial freedom. The lender will recoup the money when your house sells, either after you pass away or move.
2. You Can Choose How Your Money Is Disbursed
One of the main reverse mortgage benefits is that you get paid by your lender. But how often? It's up to you! You can choose to get your payments once a month, all at once or somewhere in between those options.
3. The Government Insures the Loan
Reverse mortgages are insured by the government. This means that if your house is not worth the amount you borrowed when it sells, the government's insurance will pay the difference to the lender. This allows you to stop worrying about the value of your home once you get a reverse mortgage, and instead focus on enjoying the money you get from it.
4. Make Retirement Benefits Go Further
Another one of the reverse mortgage benefits to expect is that it can buy you some time before you have to start using retirement income. For example, if you're 62 and start collecting Social Security now, you won't get the full benefit. But if you hold off on that and use your money from your reverse mortgage for a few years, you'll get more from the government. And once you do start collecting that income, keep in mind that the money from your reverse mortgage won't affect your Medicare benefits or the amount you get from Social Security.
Learn about how Contour Mortgage can help you get a reverse mortgage!