Reverse mortgage can offer a welcome source of money. However, they are not always the best option in every situation. Reverse mortgage is a loan that allows homeowners who are at least 62 years old to convert part of the equity of their home into cash. They provide you money as regular payments, as a line of credit, or a lump sum. In exchange, you are going to lose some of the home equity and pay insurance to serve as protection to the investment of the lender just in case you cannot pay back the loan.
A reverse mortgage is a great source of cash for older homeowners when their other income sources are not enough. However, it is not always the best option. In case something goes terribly wrong, you will be at risk of losing your house. And if you would like to pass your house to your children or spouse when you die, a reverse mortgage could jeopardize this plan.
Questions To Ask If Reverse Mortgage Is The Best Option
Are you leaving the house to anyone after you die?
If you get a reverse mortgage Myrtle Beach, you do not need to pay anything back provided that you are living in the house and you can continue paying the insurance, property taxes, as well as other required costs. In case you decide that you have to relocate somewhere else for your retirement, or in case you need to transfer to an assisted-living facility, you can expect the balance to come due even if you do not sell the house at that specific time. In case you stay in the house for the rest of your life, the balance needs to be paid when you die.
Your heirs could still take possession of your home. However, they must pay the balance off or quality for a traditional mortgage on the house. In case they do not wish to keep the house, they can always sell it and use the proceeds to pay the loan. In case they can’t the bank will sell your home. In case the house sells more than the loan balance, the difference will be given to your heirs. When it sells for much less than the balance, the mortgage insurance will cover it.
Due to these risks, it is not a good idea to take out a reverse mortgage loan if you plan to leave the house to someone else after you die. However, if you don’t have any kids or relatives whom you would want to leave your home to, then this would not be a problem.
Who Else Do You Share The House With?
If you and your spouse are at least 62 years old, both your names can be put on the reverse mortgage. If one of you dies, the other one will continue to get payments and won’t have to pay anything back until they move out or die. However, things could get trickier in case your spouse is younger than 62 years old or if there are other people in your house.
If you pass away or move to a different house or facility, the other people living in your home need to leave as well. They can’t do anything else unless they pay off the balance.
If your spouse’s age is below 62 years old, they could still be listed as a non-borrowing spouse. If they got married to you when you took out the loan and you were both married still until the time of your death or departure from your house, then they could continue living in your home without having to settle the balance, as long as it is their primary residence. However, since they are not the borrower of the loan, your spouse will no longer be able to receive payment after you die.
How Long Do You Plan To Stay In The House?
A reverse mortgage loan is not right for you if you plan to move soon or if you fear that you may suffer a medical condition that would ask you to move to a nursing home.
Can You Afford The Ongoing Cost?
Before you take out a reverse mortgage loan, you need to calculate how much you would pay in property taxes, mortgage insurance, as well as home maintenance. Your lender must be able to provide you with a good idea of what the insurance will cost. In case you don’t think you can afford all these expenses, then a reverse mortgage loan isn’t your best choice.
Learn everything you need to know about reverse mortgages. Call Reverse Mortgage Specialist now.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577
Charleston, SC 29401
Columbia, SC 29205
Greenville, SC 29607
864 920 2733