Use Your Home to Stay Home – Reverse Mortgages

A reverse mortgage allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. Here are 10 things you should know about reverse mortgages.

  1. A reverse mortgage allows you to borrow against the equity in your home.  You can use the money for anything you like.
  2. You must be at least 62 to apply for a reverse mortgage.
  3. You can get a reverse mortgage through a lender who provides reverse mortgages.  You must meet with a counselor before applying and there is a fee for that consultation, which varies and is rolled into the loan.
  4. You still own your home.  When the home is sold, anything borrowed needs to be paid.  Any remaining equity belongs to you or your heirs.
  5. You still pay your property taxes and home insurance.
  6. You pay back the reverse mortgage when you die, sell your home, permanently relocate or default by not paying your property taxes or keeping homeowner’s insurance or if the property deteriorates and you do no make the necessary repairs.
  7. There are large fees upfront, as well as ongoing fees during the course of the loan.
  8. There is a newer HECM Saver loan which began in late 2010.  This has smaller upfront fees but a higher interest rate and you can’t typically borrow as much as you can with the HECM Standard loan.
  9. While you can apply at 62, some recommend waiting as long as possible to ensure you will have the money you need for things like long-term care.
  10. It’s important to look at all the options available to you such as selling your home to be sure you are making the best decision for yourself possible.

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