House rich but cash poor is the predicament many of America's seniors find themselves in during retirement. Reverse mortgages, which are regulated by the Federal government to protect borrowers, can help ease financial burdens for retirees.
As the name implies, reverse mortgages work like a traditional mortgage, except in reverse. Rather than a borrower making payments to a lender, the lender makes payments to the borrower out of a home's equity. If the loan on a home is too large, no additional funds may be distributed to a homeowner but the monthly mortgage payment may still be eliminated.
Borrowers must be at least 62 years old and must continue to make tax and insurance payments. With the financial freedom offered by reverse mortgages, seniors can rest easy knowing that their retirement income is supplemented by utilizing a great asset: their home.
Today, conventional conforming no-point 30-year fixed mortgage rates are averaging 4 percent while 15-year rates are near 3.25 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.