Retirees who need an extra source of income may find financial relief with a reverse mortgage. This loan is designed to use accumulated home equity to help pay for rent, medical costs, and other living expenses. As the area’s premier provider of reverse mortgages, Aloha Mortgage, LLC in Honolulu, HI, helps senior citizens maintain their lifestyles.
What Is a Reverse Mortgage?
How It Works
The loan’s is officially known as a home equity conversion. It is only available to homeowners who are 62 years or older and have built up equity in their houses over the years. They can withdraw the equity to supplement retirement savings. Typically, applicants have either paid off their entire mortgage or are close to doing so.
What makes a reverse mortgage different from a traditional mortgage is that the person is not responsible for making monthly payments. Instead, they are required to continue paying property taxes and homeowners insurance. If approved for the loan, the borrower is also obligated to use their primary residence for the duration of the reverse mortgage period. If the home is sold or the borrower dies, the total amount borrowed is due.
What Are the Benefits?
One of the main advantages of a reverse mortgage is its repayment flexibility. The borrower does not have to pay back the loan unless they move or sell the home. As long as the borrower or their spouse keeps the home as their primary residence, they aren’t obligated to make payments until one of them passes away. Another benefit is tax-free withdrawals. Borrowers don’t have to pay tax on the distributions because a reverse mortgage is considered a loan and not a source of income.
Finally, reverse mortgage approvals are not connected to the applicant’s income or credit history. As long as the borrower is 62 years or older and is a homeowner that has accrued equity they will be eligible for the loan.
If you’re retired and seeking additional funds to supplement your income, a reverse mortgage may be the solution. Let the experienced lending team at Aloha Mortgage, LLC help determine if their loan products are right for you. To get started, call (808) 255-9366 to arrange a friendly, no-obligation consultation. For your convenience, the agency serves the entire island of Oahu.