A Reverse Mortgage Can Offer a Fresh Approach To Income From Real Estate
If you owe 40
percent or less of your original mortgage, there is a great
program that is available to you that will generate extra monthly
income.
It’s
called a reverse mortgage. The reverse mortgage is similar to a home
equity loan, only in the fact that it pays you the equity you have
in your house. The differences, though, are many. If you have a
large amount of equity in your home, you’ll want to consider a
reverse mortgage.
The
reverse mortgage does exactly what the phrase says. Instead of the
homeowner making monthly mortgage payments, the bank literally
reverses the action and pays the homeowner. Sound too good to be
true? It’s not, and it’s a completely legitimate program. Banks
like it, because at the end of the term of the loan (usually when
the homeowner dies), the bank acquires the house and may resell it.
Here’s
how it works. Let’s say you own a home with a mortgage balance of
$30,000 and it’s worth $100,000. The bank will put a loan on some
or all of the remaining balance, amortize it over 30 years and send
you a check for this amount monthly. Sometimes, they’ll use enough
of the remaining equity to pay off your balance, so you owe nothing.
Then, you get payments each month, and when you die, the house
belongs to the bank.
This
program is great for elderly people, who need to supplement their
incomes. Check out seniorjobbank.org, as well as the wealth-building
system, Winning the Mortgage Game to learn more about this
interesting mortgage program.
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