A reverse mortgage is a type of loan for people who have reached the age of 62 and own a home. It lets them borrow from the equity of their home. If you are planning to take out a reverse mortgage, know that it’s a major decision to make and you want to give it a serious thought first before you make your final decision. To help you get a reverse mortgage loan, below are some tips:
Take Time to Research
You can use many ways to have some retirement funds. Before you get a reverse mortgage, ensure it suits your needs. Apart from your age, there are other requirements to make you qualify for this loan. These include:
- Home requirements. You can only qualify for a reverse mortgage if your house is your main residence and your home equity should be more than enough to cover your loan.
- Reverse mortgage counseling. This is a mandatory requirement to get a Federal Housing Administration-insured reverse mortgage through the Home Equity Conversion Mortgage (HECM) program.
- Insurance and tax. You must keep up with the taxes and home insurance of your property, along with home maintenance.
Consult with Family Members
Your decision to take out a reverse mortgage may also affect your family members. Thus, it is best to talk to them about it. In case you pass away while in your house, your heirs will have the responsibility to repay the loan. They can choose to sell your home to pay back the loan or keep the property and pay off your loan. Remember that the mortgage doesn’t require you to make repayments until you move, sell the home or pass away. You will not pay back more than the worth of your home as repayment comes.
Make the Right Choice
HECM loans come in various types such as HECM for Purchase, Saver and Standard. If you want a lower cost option, go for HECM Saver but this option offers fewer proceeds. The standard option requires you to pay higher fees but you can expect higher proceeds. Lastly, the HECM Purchase lets you buy a house and take out a mortgage in a single transaction.
Attending a session with a reverse mortgage counselor is required by a reverse mortgage company for borrowers. The counseling session will help ensure you understand the loan’s requirements. You can use the session to ask questions about the mortgage or some available alternatives.