What Can A Reverse Mortgage Be Used For?

A relatively new financial product is available to seniors that could make their lives a lot more pleasurable. A reverse mortgage is a way to release equity in your property and turn it into cash. This type of product has created a lot of interest recently. But it is also a very misunderstood product. Here we look at what a reverse mortgage can be used for.

If you own your own home (or have paid off a substantial part of the mortgage), then you have a valuable asset. You are able to take out a reverse annuity mortgage that can pay you a lump sum payment or a regular monthly income. There are no regular monthly payments as with a normal mortgage. The loan is paid back when you sell the property or move out of it.

A lump sum payment can be used for a number of different uses. It can be used to carry out modifications to a property to make it easier for a senior to live in. For example the doorframes could be widened and ramp access provided. A stairlift could be installed to make life easier.

You could also use the money to enjoy life. You've spent your whole life working hard so why not enjoy yourself and go on the holiday of a lifetime. Maybe you've always dreamed of going on an around the world cruise or safari. You could also use the money to buy a new car.

You may want to use a lump sum to pay off any loans that you have. You could even use it to pay off a regular mortgage. It does sound a little strange using one mortgage to pay off another. But the advantage of this would be that you no longer have to make any payments on the regular mortgage.

A regular monthly income could be used to meet your regularly monthly living costs. This can be used to 'top up' any pension income that you have. You may also have some regular expenses to meet, such as medical costs.

You can receive a reverse mortgage as a combination of a lump sum and regular monthly payments if you wish. This will allow you to make any purchases that you need and still have a regular income.

To get more information on a reverse mortgage you can speak to your mortgage broker or a housing counselor.

By: Paul Elms

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Get the latest on reverse mortgages at www.reverse-mortgage-choice.com. You can also discover how to avoid reverse mortgage pitfalls.