YOUR HOUSE OR YOUR MONEY?

I get it. You need money fast. At 65 however, you don't have the the income that qualifies you for a long-term loan anymore. After all, you have deservedly retired. So, what do you do when you find yourself in this pickle? You decide to tap into the value of your home and convert it into some quick cash! This is made possible by a reverse mortgage. Reverse mortgage lenders are williing to let you borrow money against your personal residence. 

Why go to a reverse mortgage lender and not just a regular bank? We asked people that same exact question, and these are the most common answers.

1. You do not need to pay back the loan UNLESS you decide to sell your house or - inconveniently for you and your reverse mortgage lender - die. 

2. The loan is not based on credit history. What exactly is it based on then? The equity of your home is the biggest factor, but there are also some others. 

3. Payments, or more specifically, non-payment to your reverse mortgage lender would not affect your Social Security, Medicare, or pension benefits. 

4. Payments and loan amounts are tax-free in most cases. 

5. You are given many flexible options in order to receive your loan. Reverse mortgage lenders can give you your money in a lump sum, in monthly installments, as a line of credit, or as a combination of all three methods. 

How does one even qualify for a reverse mortgage anyway? Can anyone just call any reverse mortgage lender advertising online, and borrow against his or her own house? No. Reverse mortgage lenders won't even talk to you unless you pass the following test: 

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1. You must be 62 years or older.
2. You must own your residence. This can be a house, condominium, or a townhouse. Additionally, this property should be listed as your primary residence. If you are co-op owner, you are not eligible.
3. Most reverse mortgage lenders also require that there's no other debt against the home, such as a Home Equity Line Of Credit, or HELOC. 

Before you call just any old reverse mortgage lender, you should be aware of the following things:

1. Aside from equity, other factors that reverse mortgage lenders consider are the age of the borrower, current interest rates, and loan fees.

2. Reverse mortgage lenders often have high fees associated with origination fees and closing costs. 

3. Even with the help of a loan from your reverse mortgage lender, you still must be the one to pay for your property taxes, insurance, and general upkeep of your property. 

4. Your collateral is only your house, the loan amount can never exceed your home's value. 

The concept behind a reverse mortgage is really simple. It treats your house as a valuable asset and allows you to take money out of if you so choose. It gives you an alternative to traditional loans that your income may no longer qualify you for. A reverse mortgage is not the best solution for fixing your cash woes. It should be treated as your last and only option.