Florida homeowners have several options when it comes to accessing funds that are tied up in their home. While a home is not a liquid asset so there may not be cash available, there are ways to turn equity into cash. It is important that you understand if this is a beneficial decision for you or not.
According to Bankrate, a reverse mortgage allows you to access equity in the home that you already own, rather than simply tap into the equity of a home you currently have a mortgage on. They are only available to homeowners 62 or older and the program is designed for those who outright own their own homes or have a large amount of equity to pull from.
Reverse mortgages are common for those who suddenly need cash for living expenses or additional expenses like unexpected medical bills. The pros are that you do not have to make monthly payments toward the balance and you can use the proceeds for debt repayment, living expenses or anything else you need money for. The money can also help you to enjoy your retirement and if you do not list your spouse on the mortgage, they can stay in the home even if you pass away.
The downside to a reverse mortgage is that there are sometimes high closing costs and fees. Your home may be a key source of your wealth and taking out a reverse mortgage requires you to borrow against it. You must also maintain homeowners’ insurance and pay property taxes even though some of those things are not necessary once you outright own your home.
As consumers move into old age, reverse mortgages are intended to help those who struggle with making ends meet. Rather than getting a job or being forced to work in old age, reverse mortgages can help provide an alternative.
This is intended for educational purposes and should not be interpreted as legal advice.