What Is A Reverse Mortgage?
Are there limitations on using the money?
It is possible for a homeowner to get a reverse mortgage, even if he/she still owes money on a first or second mortgage. In fact, many seniors use the proceeds from a reverse mortgage to pay off their mortgage or credit card balances. When the balances are gone the monthly payments are also gone.
However, if there is an outstanding mortgage, the proceeds from the reverse mortgage must be used to pay off the current mortgage because the reverse mortgage must be the only lien on the property. You’re trading one kind of mortgage (with a monthly payment) for another (without a monthly fixed payment).
If existing mortgage debt exceeds the amount of money a borrower can receive with a reverse mortgage, then the borrower must pay down the current mortgage to a level to make it possible. Use our reverse mortgage calculator to find out how much you need to pay down.
The proceeds from a reverse mortgage can be used for any purpose you wish.
- Daily living expenses
- Supplementing Social Security, pension, or retirement income
- Home repairs, renovations, or improvements
- Medical bills and prescription drugs
- Restoring credit rating through credit card debt consolidation and debt abatement
- Continuing education
- Travel and vacations
- Long-term care and/or long-term care insurance
- Financial and estate tax plans
- Endowments and gifts
- Education expenses for grandchildren
- Life insurance
- Living, funeral, or dedicated trusts
- Home health care
- Foreclosure prevention
- Use your imagination...anything is possible.
Recently, due to interest rates coming down and lending limits going up, seniors that already have a reverse mortgage are using a reverse mortgage to refinance their existing loans for more favorable conditions. Click here for more detailed information on this important opportunity.
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