4 Things to Do Before Applying for a Reverse Mortgage

Reverse mortgages are getting a lot of attention these days as more seniors turn to them to supplement their income and pay off credit card debt and other bills. But before you take the major step of applying for a reverse mortgage loan, here are four things you should do first.

1. Gather all your bills to total up exactly how much you owe each month. Then compare this against your current income. If you’re coming up short each month, figure out exactly how much more income you need each month to pay all your bills. Doing this will help determine how much money you need to receive from a reverse mortgage loan to cover your expenses.

2. Determine exactly what you will do if you have extra money. Do you want to use a reverse mortgage loan to pay high medical bills or to purchase long-term care insurance? About 9 million people over the age of 65 will need long-term care this year, according to the U.S. Department of Health and Human Services. That number is expected to reach 12 million by 2020.

3. Run the numbers, then run them again. Use a reverse mortgage calculator to find out how much cash you might actually get by tapping your home equity. You’ll have to provide your age, zip code, and estimate of your home’s value. Keep in mind that if the value of your home has dropped significantly during the current housing downturn, you may receive less money than if you wait for the market to rebound. Also, the older you are, the more money you’ll qualify to receive.

4. Talk with a reverse mortgage counselor to set up a realistic plan for using cash from a reverse mortgage. It doesn’t make sense to tap your equity to get a lump sum of money if you’re just going to spend it all up in a year’s time. The idea behind reverse mortgages is that they can provide seniors with a significant source of income that will last for many years.

You can get free, no commitment quotes from reverse mortgage lenders here.

This entry was posted on Friday, August 14th, 2009 at 2:54 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.