Many banks now offer a new way of assisting the retired and elderly with their financial situation once they do not have a steady paycheck coming in. The bank gives you what is termed a Reverse Mortgage. What this means is that you can take out a loan against your property just as you would with a regular mortgage or home-equity loan. The only difference, is that with a reverse mortgage you do not make any monthly loan payments and there is no requirement for it to be paid back until the property is sold.
The loan is against the house, so it is a secured loan, but many times is not paid back until after the owners have passed on. This allows them to use the money to pay off debts, or just to live off of if retirement funds are not enough.
The one caveat however, is that the interest rates and the closing costs tend to be higher and there are other additional charges like special insurance. So if you are in a tight spot, this could be the way to assist you. However, if you don’t need it, don’t take it as you do end up with less than the house is worth. ■
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