Get insight into Reverse Mortgage Options before Final Decision Making

If you are older than 62 years of age, then you have the option to convert the home equity that you have into cash by choosing the reverse mortgage scheme. This type of loan gives you the option to borrow money against the equity that is present in your home so that you can avail a fixed monthly payment. The repayments are postponed till the borrower moves out of the house or the home is in need of repair or the person passes away. In the last case, the property is sold and the bank recovers their money.

However choosing this option can create some problematic scenarios and thus before getting to a decision it is important to explore your other options. Some of the beneficial options are:

Mortgage refinance

As a borrower, if you already have a home loan, you can refinance it to lower the monthly payments. One of the various reasons to get your loan refinanced is to have lower rate of interest on the home loan. Another benefit of getting the loan mortgage instead of taking up the reverse mortgage is that the home remains as your property which can be given over to your heirs.

The home equity loan

Essentially a second loan, home equity loan can help the borrower to borrow money by keeping the equity in his home as the security. In this option, the borrower receives a large sum payment and the interest is tax deductible. This is generally a secured type of loan and thus a person can readily get an approval. However the interest rate is higher than other kind of mortgages and while opting for this option the risk of facing foreclosure, if payments are not made on time, must be remembered.

Downsize your house

One of the best options to have a home and money, as well, is to downsize your property. If you and your partner are willing to move, you can get easy access to the equity that you have built in your house. This option may suit those whose current resident is too big for them to live in. This option can reduce the maintenance cost and make it easy for you to manage the house. The money that is received after selling the large home can be used to purchase a new house and rest of the money can be used according to necessities.

Sell the property to your children

People also have the option to sell their property to their children or child by opting for sales-leaseback agreement. In this, a person sells his house and then has the option to rent it back with the help of cash that he has received from the sale. As landlords, your child gets an additional advantage of tax deductions.

Reverse mortgage may be a good option for many however if it does not suit your situation do not go for it. Research well for various other options and then choose the best alternative to reverse mortgage scheme by consulting a qualified and experienced tax specialists.

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