10 Tips For Getting Reverse Mortgages

Introduction

Reverse mortgages allow homeowners to use the equity in their homes without having to repay that money until they no longer live in the home. This lets homeowners have cash readily available for unexpected bills, or even just for items that they may want. The amount that one can receive from reverse mortgages will depend on the amount of equity that is in the home. Reverse mortgages have options for how you receive your money. You can receive monthly payments, a line of credit, or you can have your money all at once. 

Step 1

Do not pay anyone to help you find and apply for reverse mortgages. There are companies who charge a fee to handle this for you. However, it is unnecessary as you can do this yourself.

Step 2

When shopping around for reverse mortgages take note of any fees and the interest rate. As with other types of home loans, these fees and rates can vary greatly. While it is true that you will not be making payments while you are living in the home, it is important to remember that these payments will have to be made at some point either by you or your heirs.

Step 3

One of the requirements of reverse mortgages is that you will have to meet with a counselor. There is a fee for the reverse mortgage counseling.

 

Step 4

In order to apply for reverse mortgages the homeowner must be at least 62 years of age. You must either own the home outright, or have enough equity to pay off the remainder of the mortgage. If you owe money on your home your loan will first be used to pay off what you owe, you will then be able to receive the rest.

Step 5

Reverse mortgages do not require that payments be  made as long as you are still living in the home. However, if are no longer able to care for yourself and you are put into a nursing home, the loan becomes due and the house will be sold to satisfy the loan. Unless you or your heirs can pay back the money without selling the home.

 

Step 6

Those with reverse mortgages are required to continue to pay property taxes and homeowners insurance. Failing to do so could result in your defaulting on your loan and may result in the loan becoming due. It is imperative that you keep up to date on these items. Traditional mortgages often have property taxes and insurance added into the payments. Reverse mortgages do  not.

Step 7

Another thing that can have an impact on the status of reverse mortgages is household repairs. If you allow the home to deteriorate and you do not keep the home properly maintained, that could be another cause for the loan becoming due. It is best to always stay on top of household repairs.

Step 8

Be aware of the upfront fees that you must pay on reverse mortgages. You will of course have closing costs, also expect mortgage insurance costs and loan origination fees. All of these will be paid before you receive any money from the homes equity.

Step 9

Many experts recommend holding off on applying for reverse mortgages until you are older. While you can apply at 62, it is not recommended. As you age, you may find that you are more in need of the money later. Once you take out your reverse mortgage, you no longer have that homes equity to fall back on later in life.

Step 10

Rather than taking out reverse mortgages, another option is to sell the home yourself. You can then downsize to something smaller and still have money leftover to help out with living expenses. If your home is large and has more room than you need, that may be something that you want to consider.

Tips and comments

By law you will have three days to change your mind about the loan. Be sure to get information on who to contact should this occur, also get the people telephone number and the proper procedures to follow in order to cancel. Each company who offers reverse mortgages may have different procedures.

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