The amount of money available to you with a reverse mortgage is factored by three variables. We will examine those in this article.
1. Your age. You have to be at least 62 years old when qualifying for a reverse mortgage, but will being older be a benefit on how much equity you can use? If interest rates and property values remain stable, you will benefit, but I don't think it makes sense to wait. Small increases in interest rates will have a negative impact, larger than the benefit of being a few years older.
The prior paragraph has an exception. If there is a spouse under 62 years old, but you qualify, should you wait until everyone is old enough? I can definitely say "it depends". If there is a hardship like potentially losing your home or needing a sum of money for medical expenses, it can make sense to just do the loan. Another reason to not wait is if the spouse is planning to move upon your passing so they can live near family. By taking a person off title and doing a reverse mortgage, you run the risk of leaving them without a home. They will need to refinance or sell the home since they weren't on the reverse mortgage. Please remember: It doesn't usually make sense to remove a person from title just to get more money, unless there is a hardship being avoided.
2. Interest rate is a large factor. Interest rates have reached in the low 5's. A raise of just one percentage point could reduce the amount of money you will receive by thousands of dollars. Gambling that the rates are going to go lower in the next several years doesn't seem like a good bet.
3. How much is your home worth? Since the loan amount is based on the value of your home, you may be better off using today's value, rather than hoping the value will increase enough to matter over the next several years. Trying to guess what your home will be worth in three years is pretty hard to do. Several clients waited a couple years to do a loan, only to be in today's market with lesser values than they could have ever imagined. With those kind of decreases, you may have trouble getting qualified at all.
If it works, why not take action today? What are you hoping for? If the numbers work today, just do it. You can use a reverse mortgage to enhance your retirement today, with real numbers that you can use, based on today's information. If you are interested in seeing what you qualify for, try our FREE reverse mortgage calculator</a>.
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