Is Getting a Reverse Mortgage a Good Idea?
November 23rd, 2009
- 4 Frequently Asked Questions about Reverse Mortgages
- Exchanging Home Equity for a Reverse Mortgage
- Talk with Your Kids about Reverse Mortgages
- Adults to seniors: keep the money
- Addressing concerns of reverse mortgage heirs
It can be tough to know whether not it makes sense to get a reverse mortgage. Getting a large loan is a serious financial commitment, so it definitely makes sense to err on the side of caution. Here are some things to consider about reverse loans.
Age Does Matter
The amount you receive with a reverse mortgage depends in large part upon your age. Although you can apply for a reverse mortgage at age 62, you actually receive a bigger payout when you’re older. So if you can hold off on applying for a reverse loan until at least age 70, you could end up with much more money.
How Much Home Equity Do You Have?
Home values have dropped during the housing bust, leaving many homeowners who have mortgages with negative equity, also known as being “underwater” on a mortgage. If you’re in this boat, it won’t make sense to apply for for a reverse mortgage at this point. Wait until the housing market recovers to regain some of your home equity before applying for a loan. You need to own your home free and clear, or have only a small loan against it to take out a reverse mortgage.
Think About Your Estate Plan
Do you currently own your home and want to leave it to your heirs? You can still leave the property to your heirs after taking out a reverse loan. But after you die the reverse mortgage has to be paid off before any remaining equity can be distributed to them. Consult with an estate planning attorney and reverse mortgage counselor before borrowing money your house.
Reverse mortgages are being used by many seniors to supplement their incomes. A reverse loan could possibly help you out financially, too. But it’s important to remember that these loans are not a one-size-fits-all cure for financial problems. Compare reverse mortgage quotes here to make an informed decision about whether or not to borrow money.