Second Mortgage

So what do you choose once you have reached a stage where you cannot earn, maybe after you retire?

If you are at least age 62 and are looking to supplement your income, a reverse mortgage could be your answer. Here is what you need to know in order to decide if a reverse mortgage is the right choice.

Reverse mortgages are an often misunderstood method of borrowing against equity in your home. Think of this type of loan as a regular mortgage turned upside down; instead of you paying the lender every month, the mortgage lender pays you.

Because the mortgage lender makes payments to you each month, the equity you own in your home shrinks. Reverse mortgages are an effective way to spend down equity in your home. The balance of the reverse mortgage becomes due to the lender when you move, sell the property, or die. When one of these events occurs your family can pay back the loan, or the lender will sell the property to pay off the loan.

The eligibility requirements for a reverse mortgage are simply that you are 62 years of age or older, and that your home is your primary residence. You can even use the reverse mortgage to pay off your existing mortgage to increase your monthly cash flow. The amount you will receive depends on a number of factors including your homes value, the amount of equity you own, and the interest rates and closing costs charged by the lender. Reverse mortgages can be disbursed as a lump sum, fixed monthly payments, or an equity line of credit.