You are probably going to want to start planning for your retirement years sooner rather than later so you have plenty of time to reach your goals. But when you try to plan for an event that is going to take place perhaps two or more decades in the future it can be quite challenging because there are so many things that are out of your control. Many people found this out during the financial crisis that took place a few years ago, and as a result there are those who are looking for sources of liquidity for their retirement due to losses incurred at that time.
If you own your home outright or have have significant equity in it one option that is available to you is a Home Equity Conversion Mortgage. The HECM is a reverse mortgage that is federally insured and backed by the United States Department of Housing and Urban Development. Instead of you paying the bank in an effort to earn equity in your home, with the HECM the lender makes payments to you and in so doing purchases equity in your property.
Since you are not expected to make any payments there are no credit or income requirements. The only qualifications are that you must indeed have significant equity in the home, be 62 years of age or older, and utilize the house as your primary source of residence.
There is minimal risk involved because you can’t default as there is no expectation of payment on your behalf. The loan becomes due and payable upon your death or when you voluntarily move from the home. Many people will simply sell the house, use the proceeds to satisfy the debt and then pocket any remainder that may exist. Of course, if you or your heirs wanted to keep the house and use some other source of funding to satisfy the debt you are perfectly free to do so.
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