PHOENIX — If you’re nearing retirement and wondering how you’re going to live on limited income, you may be able to use your home to get some much-needed cash.
By getting a reverse mortgage, homeowners can convert part of the equity in their home into cash. Instead of the owner making monthly payments to the lender, the lender pays the homeowner.
Most of the time, older homeowners will use the money to pay medical bills or routine everyday expenses.
“You would take that cash, and you would have it and not have to repay it until you either move out of the house or die,” said Mike Sullivan of Take Charge America, a credit counseling service.
The lender will get repaid once the homeowner either sells the home or no longer lives there. Sullivan said that if you’re over 62 and have a limited income, a reverse mortgage might be a good option.
“If you have to have money to live on, and you don’t have any other source of money, then, as I always say, ‘This is certainly better than eating dog food,'” Sullivan said.
Sullivan added that if the homeowners aren’t careful, however, they could still lose their home to foreclosure, if they don’t stay current on other payments, such as insurance and property taxes.