Reverse mortgage do’s and don’ts

Reverse loans allow seniors to convert home equity to cash. This can be a good thing in some cases, or a disaster in others. Before applying to borrow money, remember some of the following things you should and should not do.

1. Do seek out a knowledgeable housing counselor who can discuss reverse mortgage guidelines. Any reverse mortgage counselor you work with should have passed an exam approved by the Department of Housing and Urban Development (HUD), and should continue to get follow-up training as needed.
2. Do compare quotes from several reverse mortgage lenders. Fees can vary, so it’s important to gather several quotes to find the best deal.
3. Do talk with reverse mortgage heirs who might have to deal with the loan after you die. Keeping family members informed about your plans can help avoid problems and confusion later.
4. Don’t rush into a reverse mortgage just because a friend did. Reverse loans can help supplement your income, but these financial products aren’t for everyone. You may not have enough home equity to make it worthwhile to borrow money.
5. Don’t get a reverse home mortgage without having a specific plan for using the proceeds. All money received from a reverse mortgage should be accounted for with a budget or long-time savings plan. Even if you deposit proceeds from a reverse loan in an interest-bearing account, take time to investigate the best places to stash money for the long term.
6. Don’t stop paying on homeowners insurance and property taxes. Falling behind on these financial obligations can result in a reverse loan having to be repaid early.

Gather the facts you need to make the right choice about borrowing against home equity. Any decision you make should improve your financial situation so that you can live comfortably in retirement.

This entry was posted on Wednesday, September 1st, 2010 at 6:00 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.