There are 5 key points to think about when you decide a reverse mortgage may be your best option. Most important find an expert loan officer willing to help you make a determination.
1. Why do you feel a reverse mortgage would benefit you? If you are thinking of taking a vacation or reinvesting the money it would be very costly. If someone is trying to sell you something and suggests you take out a reverse mortgage you should be very cautious of their intent.
2. Can you even afford a reverse mortgage? A reverse mortgage is very expense, You do not make monthly payments but interest will accrue on the loan every month. The younger you are when you take out a reverse mortgage (min age 62) the longer the interest will grow which in essence will increase the amount you owe.
3. Can you afford to use your home's equity? If you are not facing a financial emergency you may consider another option.
4. Do you have other options? If you have the means to take out a home mortgage and make the monthly payments this would be a less costly option than a reverse mortgage. Have you thought of downsizing and selling your current home to buy one with lower costs or in an area that offers more services?
5. Do you understand how a reverse mortgage works? You need to find out up front if this could benefit you or if there is a better option. You must complete couseling and receive a certificate to move forward. Your loan officer can give you the names of counseling agencies in your area.
A reverse mortgage can be the best thing since sliced bread if you understand and limited income. It gives you the opportunity to use your home's equity while you need it. It can help supplement an income, help with medical expenses or long term care. You can make repairs on your home or purchase a vehicle and not worry about adding high debt to your monthly budget. The money is yours to spend as you wish but wisdom is important.