Reverse Mortgage

For some baby boomers, a reverse mortgage might be an excellent way to supplement retirement income before and after retirement. A reverse mortgage is exactly that, a reversal of a normal home mortgage. Instead of borrowing money and making monthly payments to a mortgage company, the home owner gets a loan from the mortgage company which will be paid out over time, usually for 15 years. The loan can be up to 60% of the home's current value. The homeowner continues to live in the home and pays the insurance, real estate taxes and normal upkeep. The homeowner benefits by no longer having to pay their mortgage, it comes out of the monthly loan payment from the mortgage company, and actually receives additional money from the mortgage company. Obviously, the homeowner needs to have significant equity in the home prior to entering into such an agreement. Since this is actually a loan, the homeowner must pay substantial closing costs. The reverse mortgage ends when the homeowner sells the house or passes away. At that time, the remaning balance of the loan is paid off and the homeowner or heirs receive the remaining equity. A reverse mortgage is not for everybody but is something one should look into in an effort to supplement retirement income.