Tapping your Home Equity
It's no surprise that reverse mortgages are becoming popular among seniors
US News and World Report, June 13th, 2006
For many of today's retirees, a home can seem like Fort Knox without
the key. Escalating real-estate prices have caused many seniors' homes
to skyrocket in value. But unless they're willing to sell, it may be an
inaccessible gain during a time in their lives when extra income and
liquid assets would be most welcome. There is a way to tap those
profits--a reverse mortgage. "Many seniors are sitting on home equity
they never dreamed of," says realty expert Tom Kelly, whose recent
book, The New Reverse Mortgage Formula, is a guide to what a growing number of elderly homeowners see as a way to have their home and cash in on it, too.
A reverse mortgage allows a homeowner to borrow against the equity
in a home, but unlike a home-equity loan, the loan and interest do not
have to be repaid until the home is sold. The loan might be in the form
of a line of credit that can increase over time and be drawn on as
needed, a lump sum payout, a fixed monthly check for as long as you
live in the home, or a mix of options. There is minimal or no upfront
cost, as closing and other fees can be wrapped into the loan. The
reverse mortgage also pays off any existing mortgage, ending that
monthly bite on income. Cleo Dunn, an 88-year-old widow in Leawood,
Kan., says the $1,200 a month she receives from her reverse mortgage
supplements her Social Security check. That helps her pay medical and
other bills while remaining in the home she loves. "I have this most
beautiful garden," she says. "I have a life here I could not have
anyplace else."
Read more of this article. Find out more about reverse mortgages.