Reverse Mortgage Income

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What Options Are Available To Leverage My Home Equity?

A reverse mortgage is not your only option. If you are looking for a lump sum to pay for a future purchase, an investment, or simply to pay off current outstanding debts, a conventional mortgage might be the right fit for you. If you are looking for more flexibility, including the option to only remove funds as you need them, then a home equity line of credit could be a better option. Below is a brief summary of the three major alternatives.

Conventional Mortgage

A conventional mortgage is a charge that is registered against the title of your home. The charge is security for an amortized loan that requires regular monthly or bi-weekly payments of principal and interest. The disadvantage of a conventional mortgage compared to reverse mortgage is that it will require an income, and a good credit rating to qualify.
That being said, a conventional mortgage could be an ideal solution for you if:

  1. You or your spouse is under the age of 55
  2. The amount you need to borrow is greater than the amount you can receive through a reverse mortgage
  3. You are planning to move or sell your home within 3 years
  4. You want to increase your monthly cash flow
  5. You can access up to 85% of your homes value

Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) works similar to a standard line of credit in that you can access the funds at anytime, up to the credit limit. It is re-advanceable meaning that when you pay the balance down you can borrow it again. In addition, with HELOC you only pay interest on the funds you use, and typically you can access the funds from online banking, phone, or fax. The disadvantage of a HELOC compared to a reverse mortgage is that they require income, and credit to qualify. However, a home equity line of credit may be a solution for you if:

  1. You or your spouse is under the age of 55
  2. The amount you need to borrow is greater than the amount you can receive through a reverse mortgage
  3. You are planning to move or sell your home within 3 years
  4. You would like to increase your monthly cash flow
  5. You would like to be able to make interest only payments
  6. You only pay interest on the funds advanced to you
  7. There is only a small penalty if you pay the HELOC off early
  8. Convenient access to funds for current or future use
  9. You can receive up to 65% of your home’s value on a secured line-of-credit

Private Mortgage

A Private Mortgage is a charge that is registered against the title of your home as 1st mortgage or 2nd mortgage behind existing financing. The charge is security for an interest only or amortized loan that requires monthly mortgage payments. Private mortgages have a higher rate of interest than conventional mortgages, HELOC, and reverse mortgages; however, a private mortgage may be a solution for you if:

  1. You or your spouse is under the age of 55
  2. Need to borrow an amount that is greater than the amount you can receive through a reverse mortgage
  3. Are planning to move or sell your home within 3 years
  4. Would like to increase your monthly cash flow
  5. Would like to be able to make interest only payments
  6. Would like to receive up to 75% of your homes value
  7. Need to consolidate high interest consumer debt
  8. Need to payoff judgements or liens on your home
  9. Are in arrears or foreclosure with your current mortgage lender

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  • Pay off debts
  • Fix up your home
  • Cover monthly expenses
  • Never make a payment
    until you choose to move or sell

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