The longer you own your home in Michigan and the more you pay down your mortgage, the better you are financially because you gain equity in your home. That equity helps to balance the debt of your mortgage. Ideally, you will have more equity than debt. However, over time, you do have options where you can borrow against that equity. This, of course, reduces your equity and increases your debt. One such option that allows you to do this is a reverse mortgage.
According to Bankrate, a reverse mortgage is only available to you if you are over the age of 62. Most often, a reverse mortgage is only for you if you own your home and no longer have a mortgage. However, if you have considerable equity in your home, even if you have not paid off the mortgage, you may still qualify, but do note that you will have to use some of the loan to pay off your mortgage.
This type of loan is made to help supplement retirement income. Your house must be in generally good shape and well cared for. You also need to not have any liens for taxes or anything else on your home. You can use the money for almost anything you want, but there may be restrictions, such as mentioned before about paying off your mortgage first with the money. You may get funds through a lump sum payment, monthly payments or as a line of credit that you just borrow from as you need.
Do understand that getting a reverse mortgage is really like getting another mortgage because your home becomes the equity for the loan. However, unlike a mortgage, you do not make payments to repay it until you move from the home or pass away. Upon your death, your estate must pay back the loan. One more thing to note is that you will never have to pay back more than your home’s value even if that has changed by the time you have to pay it back. This information is for education and is not legal advice.