We have all heard local realtors and local real estate agents talk about the multiple perks and advantages of reverse
mortgages. Yes, a reverse mortgage allows you to live in your current home
after retirement while bringing a regular income as well. However, if you wish
to make a shift or a move to a new place then a reverse mortgage can even be
used to purchase a new home.
We will tell you how you can do
that in this article below. If you are an elderly citizen of the country who
has retired from service then your worries regarding future income and house
for your family are legit. After retirement, the monthly income becomes way
less while the expenses remain the same.
Even though retired people do
have the option of home equity but the cash flow significantly reduces after
retirement. Then if we add medical expenses among other things, retired
citizens usually become long-shot candidates for any kind of loan or
financing. Under such circumstances, a
reverse mortgage will help you get a new home. Stay tuned to find out.
How a reverse mortgage
can get you a house after retirement?
Usually, many people overlook the
benefit of using a reverse mortgage to find a new home because they are too
caught up reaping off the benefits of their home equity. But let us tell you
that you would be in a better place if you use this mortgage to buy a new
house. Let us explain to you using an example.
A family makes the decision of
putting their property such as their home on sale and shift to a new location
where their living expenses can be reduced such as in a small house or an
apartment that requires less maintenance. Now their current house is valued at
let’s say $600,000, they will end up getting around $300,000 once the deal is
signed. Other than this, the family has a saving of $100,000 in their bank.
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Now they have the offer to
purchase a new smaller house in a new town worth $400,000. The family now has
the option to purchase this new property by hiring a top real estate agent right away without any mortgage
payments however in the end they will be left with no savings and no cash.
Wouldn’t the family feel more at ease if they have access to cash as well along with a new home? Of course, they would and a reverse mortgage helps you achieve this goal. One convenient way to achieve this is simply to purchase a new home with a conventional mortgage plan but then again what if the earnings of the family are minimal, and they cannot qualify for loans.
In a worst-case scenario what if
the credit history of the family is so bad that they cannot afford monthly
mortgage payments. In this case, only a reverse mortgage can help them.
Taking the same example in hand.
The family can purchase their new home in the new town for $400,000 by directly
paying $200,000 as a down payment and then opting for a reverse mortgage
through distributing the remaining payment. This way you will not have to pay
any amount for the house would have a house worth $400,000 in your possession
and $200,000 as cash for your other expenses.
How much money can I
finance through a reverse mortgage?
This depends on the worth of the home you are about to purchase, the interest rate, and the exact age of the youngest person in the family who is listed as a borrower.
