Having sufficient money to cover basic living expenses is key to leading a good life. Unfortunately, the skyrocketing costs of living make this a tricky endeavor for many people, especially retirees. Rising medical bills on a small pension and little life savings can make your life difficult.
Rather than struggle to live under a pile of debt, you can take proactive measures and boost your monthly income. A reverse mortgage program provides persons of more than 62 years with an opportunity to use their homes as loan collateral.
Pay off the remaining mortgage
Unlike the conventional home loans, a reverse mortgage does not come with monthly payments. Once you go through the evaluation process successfully, a lender gives you a lump sum amount that corresponds to the value of the home.
Hence, you can use some of the money to offset the mortgage and eliminate the monthly payments. By removing mortgage commitment, this loan ensures that you have enough money to meet your living expenses and bills.
However, you can only take such a loan on your primary residence and continue to reside there. It becomes due once you move out or pass away.
Renovate the house
It is important to note that although you’re not making monthly payments, a reverse loan still carries an interest. As such, the principal amount due on the house grows with time. Luckily, you can use some of the proceeds to renovate the home to suit your needs and preferences.
However, it’s advisable to make changes that would increase the value of the house as well as those that meet your needs. Such a move ensures the house improves in value, making it likely to sell above the value of the loan and the extra money passes to your heirs.
However, you should focus more on carrying out renovations that improve your life, as the loans are non-recourse.
If the cost of living is driving you up the walls and you’re more than 62 years old, you should consider signing up for a reverse mortgage. Such a loan arrangement lets you improve the quality of life using your house as collateral.