Should You Sell Your Home Instead of Getting a Reverse Mortgage?

Many homeowners are facing a difficult time selling their homes these days. But selling your home could help improve your financial situation if your struggling with house-related expenses. Here are some things to consider, when trying to decide whether to sell your house or apply for a reverse mortgage.

Do You Want to Downsize?

If your home has become too much to handle, getting a reverse mortgage may not be the best solution. A reverse home loan allows you to stay in a home but you still need to keep up with repairs and maintenance, or hire someone else to do these tasks. Selling your home can free you from all of the work and expense that goes with home ownership.

One option is using a reverse mortgage to buy your smaller home–for example, if by selling your old property you get $400,000, and then spend $200,000 of it on a new home, you’d have $200,000 left. By doing a reverse mortgage on the new home for $100,000, you get to spend $300,000 and still have no house payment.

Do You Have a Lot of Home Equity?

If you have a lot of equity in your home and are over 62, you qualify for a reverse mortgage. But you may not be able to borrow the full amount of that equity. Selling your home can allow you to cash out all of the equity you have in your home. However, housing values have tumbled in some areas, and there are steep costs involved when you sell, like real estate commissions, so you need to decide if you really want to sell now or wait for housing prices to increase.

How Is Your Health?

It’s been known to happen–seniors with reverse mortgages find themselves embarking on lengthy hospital or assist-living facility stays. Then they emerge to find themselves in foreclosure. Reverse mortgages only make sense when you will be in your home for many years. Similarly, if you dream of embarking on a two-year worldwide jaunt, don’t expect to fund it with a reverse mortgage–one of the few requirements of reverse mortgage lenders is that you live in the home as your primary residence.

Don’t rush into a reverse mortgage without considering whether or not it makes sense to sell your home and downsize or relocate. If you decide that a reverse loan is right for you, compare mortgage quotes here.

This entry was posted on Wednesday, November 4th, 2009 at 9:40 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.