Retirement might come with new freedoms, but it does also mean the end of your regular paycheck. Everybody would like a little bit of spending money in their retirement, but how to get it without creating massive debt for yourself?
Keep it simple
Thing you should know is that you can only apply for a reverse mortgage at one of two kinds of institutions – a government lending agency or a private lender. If you go through a government Agency you do have the additional peace of mind about the home loan is backed up and insured by the government. This is the only real difference between the two and the final choice lies with you, and what you’re more comfortable with.
What amount are you eligible for?
As with any loan process, it can get a bit complicated if you lose sight of everything you’re supposed to do to complete the application. When you apply for your AAG reverse home loan, your lender will use a reverse mortgage calculator to ascertain the amount you can borrow, based on the total value of your home.
The calculator takes several factors into account, such as how old your home is, where it is located and what condition it’s in. The higher the final score is on all of these factors, the greater the amount you can borrow, as your percentages go up.
What do you do with the cash?
Because it is your reverse mortgage, you get to choose how you spend the money. You do, however, have several options when it comes to your choice of taking delivery of the money. You could take the entire amount that you are entitled to in one big payment as a lump sum, which means that you will have access to a larger amount of cash if you really need it for emergencies such as hospitalization.
Your other option is taking delivery of it as a line of credit, which means that your loan takes on the function of a credit card, and you can access both smaller and larger amounts of money on an ad-hoc basis as you need it. Finally, you can also choose to have smaller amounts paid to you regularly on a monthly basis, in which case the money acts almost like a salary, and you can make predictions and budgeting decisions based on a predictable amount per month.
When can you get started?
You may apply for a reverse home loan as soon as you turn 62 years old. Your loan will also be subject to various other criteria, such as the fact that you have to be the homeowner and its main permanent resident for the duration of the loan validity.
You will also need to be able to prove that the house with which you are applying is not a rental or a holiday property, and that you are able to reliably pay property taxes, maintenance and other reasonable costs that are associated with home ownership.
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