5 Ways To Know When A Reverse Mortgage Is Right For You
A reverse mortgage can be a safe, easy option for accessing the equity you have stored in your home. Most reverse home mortgages are HECMs that are governed and closely regulated by the Department of Housing and Urban Development, making them secure sources of revenue.
The amount you receive when you apply for a reverse mortgage will depend on your home value, current interest rates and your age. Here’s how to know if a reverse mortgage is right for you.
You are over age 62 and you have at least half your home loan paid off
In order to apply for a reverse mortgage, you must be over age 62 and have a good amount of equity in your home, generally at least 50 percent. The more equity you have, the more you’ll be able to borrow against the value of your house. And since a reverse mortgage is a nonrecourse loan, reversemortgage.org explains “the borrower or the borrower’s estate will never be obligated to pay the lender more than the loan balance or the current value of the home, whichever is less.” So when you pass away, the proceeds from the sale of your home should cover the balance of your mortgage, leaving no outstanding debt for your heirs to worry about.
You would like to spend the rest of your life in your current home
When you get a reverse mortgage, the money is used first to pay off the balance of your home loan and the rest you may use at your discretion. You’re then allowed to live in the home for the duration of your life, even if the money from the reverse mortgage runs out before then. When you pass away, the house can be sold without the headache of worrying about who will be in charge of taking care of it or how it should be split between siblings.
You would like to make improvements to your home
Another positive aspect of having your home paid off is that you get the flexibility of using the money you were using for mortgage payments to use at your discretion. Some people use that extra money to make changes to their home to allow them to age in place. For instance, you might add a ramp, widen doorways, or change out floor coverings to make your home more comfortable.
You’re on a fixed income and need help with unexpected expenses (i.e. medical bills)
When your age catches up with your health, medical bills have a tendency to pile up. If you’re worried about how to make ends meet, a reverse mortgage can help remove some of the financial worries from your mind. And as long as you keep up with property taxes, home insurance and normal home maintenance, you don’t have to worry about losing your home.
You’d like to pursue travel or other interests
A reverse mortgage can also allow you to access funds to allow you to live out your retirement comfortably. You can travel, pursue a hobby, or simply worry less about finances during your senior years. You worked hard to “support” your home, now you can let it support you.
Article by www.ksl.com