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5 Signs That A Reverse Mortgage Is Your Best Option

reverse mortgageIf your biggest asset is your home equity and you are short on cash, don’t know any other way of raising money you need to cover your daily expenses, then you may want to consider taking out a reverse mortgage. But keep in mind that this is not something that you should take lightly. You most likely spent years of hard work to build up your home equity and if you take out a reverse mortgage, you will be spending a significant part of that equity on the interest and loan fees.


Is Reverse Mortgage A Great Option For You?


A Great Solution For Long-Term Issues


In order to qualify for a reverse mortgage loan, you should own a home or nearly done paying it off. In order words, you must have enough home equity so that a reverse mortgage will leave you with a sizeable lump sum payment monthly or a line of credit once you have paid off your current mortgage balance in case you have one. Asking for quotes from at least three mortgage lenders and undergoing reverse mortgage counselling can offer you a great idea if this type of loan can offer a long term solution for your financial issues or not.


You Have No Plans of Moving Out


You have to live in the house for a long time and probably spend your retirement years there if you plan to take out a reverse mortgage. To begin with, a reverse mortgage comes with costly upfront costs. There are the origination fee of as much as $6,000 and other lender fees. Upfront mortgage insurance amounts to between 0.5% and 2.5% of the appraised value of your house, based on the reverse mortgage plan that you select. And the closing costs, like a home appraisal, title insurance, as well as a home inspection.


You don’t want to pay all of these fees if plan to move in a few years. Also, in case you move out, you need to pay the reverse mortgage, and based on where you’ve spent the money that you got from the loan, you might not be able to do that, which means you’ll end up without a home.


You Can Afford The Ongoing Cost


If you have a reverse mortgage loan, your property taxes, homeowners insurance, as well as home maintenance must be covered regularly. In case you fall behind your payments, the lender could declare your loan due and you have to pay it back.


In case you fail to pay the property taxes for a long time, the country tax authorities could place a lien on your house, take possession of it, and then sell it so they can recover the taxes you owed. The claim of the tax authorities to your property supersedes the lender’s claim, and that means if you don’t pay your property taxes, then you are putting the collateral of your lender at risk.


Your Spouse Is At Least 62 Years Old


A reverse mortgage borrower should be at least 62 years old. In case you are married and your spouse is below the qualifying age, then getting a mortgage loan isn’t a good idea. Although new laws will protect your non borrowing spouse from ending up losing your house after you die, they still will no longer receive reverse mortgage proceeds once you are gone. In case you reverse mortgage has been set up as either a line of credit or a reverse or a monthly income stream, your spouse could possibly lose access to the monthly source of income that you used to depend on.


Additionally, reverse mortgage proceeds are always based on the age of the youngest spouse, whether he or she is on the loan or not. They younger the age is then the lower the amount that can be borrowed.


You Don’t Have Any Plans of Bequeathing Your Home


There are some people who would rather not leave their house to anybody except their spouse in case they are married. If you don’t’ have kids or your children are already financially successful and have their own homes, then you really have no reason to bequeath your house.


Perhaps because you have worked really hard to pay for your house, you would just like to cash in on the equity and then spend it all before your time comes. Then you can do so at will. Once you die, your loan will become due and payable. Heirs would like to own the house will have the chance to pay the reverse mortgage balance to the lender so they can take back the property title. However, they usually can’t do this. In some cases, they don’t have the cash or they are not qualified to get the regular mortgage to purchase the house.


In case your heirs don’t buy the house, the lender will sell the property so they can recoup the cash it has lent to you through the reverse mortgage loan. Your estate will receive any positive balance between the proceeds of the sale. In case there is a negative balance then the Federal Housing Administration insurance will cover it.


Call Reverse Mortgage Specialist if you believe a reverse mortgage loan is right for you.


Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577
(843) 491-1436


Charleston, SC 29401


Columbia, SC  29205
(803) 592-6010


Greenville, SC  29607
864 920 2733