Caledonia, WI is a community growing older and older. At the same time, residents of Caledonia are looking for financial options to increase their post-career years. One option is a reverse mortgage, a way for older Americans to take advantage of their existing home equity to increase income. However, it's not a perfect solution; there are some guidelines and cautions. In this article, the mystery of reverse mortgages shall be removed, and Caledonia shall be capable of determining whether it is the right choice for his or her financial need.

A reverse mortgage is a loan product available to homeowners aged 62 or older that allows part of the equity in the home to be transferred into cash. A reverse mortgage is the opposite of a traditional mortgage in that a lender pays the homeowner through periodic payments or through a lump sum. The homeowner is under no obligation to make repayments, but the loan is payable when the homeowner sells the house, permanently moves out, or dies.

Eligibility Requirements:

• The homeowner must be at least 62 years old.
• The home must be the primary residence.
• The homeowner must have sufficient equity in the home.

• Lump Sum: A single disbursement at the time of closing.
• Monthly Payments: Equal monthly payments that are provided for as long as the homeowner occupies the home.
• Line of Credit: Payments made in unscheduled amounts or at an unscheduled frequency until the account is exhausted.

Pros and Cons of Reverse Mortgages

Pros:

• Income Resource: Increase your income for retirement, healthcare, and general expenses.
• No Monthly Payments: No monthly mortgage payments are required from the borrower.
• Retain Home Ownership: The homeowner retains the title and continues to live in the home.

Cons:

• Accumulating Interest: The loan balance increases over time, with interest accruing.
• Reduced Inheritance: The equity available to heirs is reduced.
• Fees and Costs: Reverse mortgages come with high upfront costs and fees.

Caledonia is a growing community within Racine County. It combines suburban and rural living, making it very popular with retirees who enjoy its small-town ambiance with large-city amenities just a short drive away. Housing values have begun to climb, making reverse mortgages an attractive option for many senior homeowners who want to draw on their home equity without selling their homes.

Local lenders within Caledonia develop tailor-made reverse mortgage products, with most of them working in collaboration with financial advisors to ensure the product is suitable for the overall financial plan of the borrower. Those who want to take out a reverse mortgage should find trustworthy lenders and should ask about the various programs available, including the Home Equity Conversion Mortgage, which is insured by the Federal Housing Administration.