Retirement living can be a challenge. Fixed incomes rarely leave room for emergencies. So if you need long-term medical care, have credit card debt or home repairs you want to pay for, that can put quite a strain on your financial resources.
You can take out a loan to get access to the funds you need. However, instead of normal loans that work by you having to pay the lender back, you can opt for a reverse mortgage loan. This type of loan allows you to tap into the equity of your home safely. Depending on your circumstances, it might just be the right financial tool to help you out of the bind you’re in.
These mortgages are supported and regulated by the U.S. Department of Housing and Urban Development, or HUD, along with the Federal Housing Administration, also known as FHA. They’re also non-recourse loans. That means your heirs won’t be held responsible for paying off the loan. When you or everyone else named in the policy passes away, the property gets sold off. Your heirs won’t even have to handle the arrangements or worry about selling the property. The lender takes care of all that. Once the sale is done, the proceeds are used to cover the loan.
However, make sure you meet the conditions and that you won’t have any problem fulfilling these requirements in the future. While your credit standing won’t matter, it’s important that you have enough funds to pay for your property taxes and homeowner’s insurance, says the American Association of Retired Persons, or AARP. You must also own the property you’re using for the loan. If you still owe money on your home, you can use some of the proceeds from this loan to pay them all off. Also, you must be 62 years of age or older to qualify.
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