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Using a Reverse Mortgage to Pay for the Care of a Family Member

Posted by  on Apr 16, 2009
 
When a difficult time occurs often a larger amount of money is needed by a family in order to be secure in their everyday activities. To help finance a family through these rough times they can use the equity built up in their home to obtain a home equity loan for the amount of their house, and they can put that towards health care or the hospital fees and bills for a sick family member that needs medical attention.

What is a Reverse Mortgage?

Your house is a solid investment and carries a large financial value. When you need money there are ways to use your house as collateral and take out a loan worth up to the value of the house. These loans lend you the money you would receive if you were to sell your house that day. If you do not pay the loan back, the lender can come and take your house and sell it to recover any losses. Because you are getting money but not actually selling your house you can continue to live there as if you had just purchased the house and taken out a normal mortgage. There are different ways to use the money, as well as obtain the money, often borrowers can set up programs to be paid a certain amount of money every month or in one large lump sum.

How Do You Get a Reverse Mortgage?

When you want to look into a reverse mortgage, you will need to talk to your original lender for your home. They will help you work out the conditions of your new mortgage arrangement. What you need to realize is that in order to use this option, you will need to stay in this home for the duration of the mortgage. If you should move away, the conditions will be nullified, leaving you with no opportunity to get those monthly payments.

You will also have to be at least 62 years of age in order to qualify for a reverse mortgage.

To start you must talk to your original lender to start to work out the terms of your new mortgage. Another thing to keep in mind is the fact that you need to remain in the home for the duration of the loan, if you are to move away the loan becomes nullified and you loose the ability to collect the monthly payments.

Also there is an age requirement of 62 in order to be eligible for a reverse mortgage.

What are the Benefits of a Reverse Mortgage?

One of the best benefits from a reverse mortgage is the tax free aspect. Reverse mortgages are tax free so they are a solid source of income in the latter years of your life that prove to be free of any hidden or unforeseen taxes.

Also reverse mortgages have many different options in terms of receiving the money. You can obtain one large amount when you first take out the loan, or perhaps be paid monthly with various amounts. Also you could take out a line of credit with the money you’ve been lent.

Another great feature is that the money can be used to improve the house itself, often raising the value and making the house more livable for the person for years to come. With wheelchair ramps and new accessibility features, perhaps an elevator, you won’t have to move out of your house in the future.

To help pay for your loved ones health care costs you can get a reverse mortgage off of your home for them or you can work with them to get a reverse mortgage off of a property they own. Thus they will have the money they need to sustain themselves in our modern healthcare system.

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