There are some important things to know about Reverse Mortgages, or also known as Home Equity conversion Mortgages (HECM). HECM’s allow you to convert equity in your home to monthly income. They are FHA insured loans so you will NEVER owe more than the house is worth. You and your heirs are protected against market decline. You have to be at least 62 years of age and have substantial equity in your home.
Option 1 – Aging in Place
With substantial equity in your current home, borrow on your current equity to increase your monthly income to stay in your home. You can use the extra income to age in place. For example, install grab bars in the shower, install higher toilets, or hire a housekeeper or gardener to help you maintain the property, or may be the house is already great, so travel more. Maybe you need the extra income to have in-home health care. Do what is best for you.
Option 2 – Right Sizing
You can buy another home that may fit your needs better. Fore example, let’s say you decide to sell your current house because it has too many steps, but you aren’t ready to move into a “senior” living facility. You would rather age in place in a single level home, but you don’t want to tie up all your cash savings or all proceeds from your sale. Wouldn’t it be smart to put just 50% down and use HECM Purchase Program to receive additional monthly income as long as you live in the home and pay your property taxes and maintain it in good condition?
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