Reverse mortgages can provide you with a breath of fresh air in case you’re going through financial difficulties. But it’s doing this by using your home equity, which is by far your biggest asset. That’s why it’s important to know when to say “Yes” to a reverse mortgage.
Here are some situations when you should definitely choose a reverse mortgage:
1. When you and your spouse are 62 or older.
You need to be at least 62 years old if you want to get a reverse mortgage. If you and your spouse are both at least 62, getting a reverse mortgage is a good idea. But that’s only if you need the money immediately. If you don’t, postponing the loan will only increase the proceeds.
Reverse mortgage proceeds are based on the youngest spouse’s age, whether that person is on the loan or not. The older you and your spouse are, the higher the amount that you can borrow.
2. When you don’t plan to leave your home to anyone.
Parents usually think about they will leave to their children. But, if you don’t have any children, or if your children are financially successful, inheriting your home might not really make a difference in their lives. In such situations, you can use your home equity to get some extra cash and make your retirement more enjoyable.
Reverse mortgages become due after you pass away. If your heirs want to take possession of the house, they can pay the balance to the lender. If they can’t or won’t buy the home, the lender will sell it to get back the money that it lent to you. If there’s any extra money left, it will go to your heirs.
3. When you plan to remain in your home for the rest of your life
A reverse mortgage becomes due not only after you pass away, but also when you sell or leave your home. If you don’t plan to leave your home, and if you also meet the other requirements, a reverse mortgage might be good for you. Lender fees and closing costs for reverse mortgages might be high, but you don’t have to pay them if you stay put.
4. The proceeds you get from a reverse mortgage can solve your financial problems.
If you’re in financial difficulties, you can use the equity in your home to take care of them. And if you qualify for a reverse mortgage, you should get one. Reverse mortgage counseling will help you understand if this type of mortgage can help you out. All you need to do next is to go out shopping and search for the best offers.
5. You can afford homeowners insurance, ongoing property taxes and home maintenance.
Taking care of homeowners insurance, home maintenance and property taxes is extremely important if you want a reverse mortgage. If you fall behind, your loan will become due.