When you’re looking to retire in St. Louis, a reverse mortgage can seem on paper like a good idea. If you’re at a limited income state in your life, and your home has risen considerably in value, a reverse mortgage can help you to retire comfortably. However, there are severe downsides to this trend.
What is a Reverse Mortgage?
A Reverse Mortgage is a loan that doesn’t require you to make any payments on your home until after your death, as long as you keep the home. If EVERYONE on the lease is at least 62 years old, you can take out a mortgage against what you owe. If you only owe $20,000 on the home, you may want to take out $120,000. This will apply $20,000 toward the original mortgage, and net you $100,000 for your retirement. As you can see, these are ineffective if you still owe quite a bit on the house.
This type of loan comes with risk, though. The lender is, in essence, buying your home when you pass on. They want to ensure that the place will be in sellable shape, so you are required to live there to keep the reverse mortgage. If you are forced to move into hospice care or are otherwise kept away from the home for more than 12 months, the loan can be terminated and the balance brought due immediately, with interest.
You also are in charge of maintaining the home and keeping all of your property taxes and insurance payments up to date. Before you can receive a penny from the bank, an agreement is required to complete all repairs specified by the bank and an inspector by a set date. The bank WILL inspect again to ensure that this is complete. Failure to comply can, again, call in the loan immediately.
This type of mortgage also makes it extremely difficult to leave your home to your children. When all of the borrowers have passed away, the loan will come due and must be paid in full. Unless your children have the money to pay it off, this usually requires the sale of the house. Of course, if they did, you probably wouldn’t be taking this type of loan out in the first place.
With a cash-out refinance from The Home Loan Expert, Ryan Kelley you can accomplish all of these goals without the risk of putting your heirs and home in jeopardy. This loan lets you make payments as you go, allowing you to keep your home in the family for years to come by not passing on the debt to your children. A cash-out refinance lets you borrow against your home much like a reverse mortgage, but doesn’t force the stiff requirements on you to maintain your home and insurance payments, lest you suffer a balloon payment. With interest rates so low, it’s a great time to refinance your home to put some retirement funds in your pocket. Call our St. Louis office today at (314) 781-9700 and visit www.thehomeloanexpert.com to apply online. Nobody makes it easier to get the best mortgage available.