Should You Sell or Take Out a Reverse Mortgage?
As seniors consider supplementing their retirement with the equity of their home, many have difficulty deciding whether to sell the property or apply for a reverse mortgage.
Although selling the home may be financially advantageous, many seniors would much rather stay in their homes than go through the hassle of finding a new home and dealing the moving costs. Reverse mortgages can help seniors stay in their homes and supplement their retirement income. This feature is arguably one of the most attractive qualities of the reverse mortgage.
Before making such a big decision, however, homeowners need to consider the pros and cons of both selling the property and taking reverse mortgages.
Selling Your Home
There are many factors to bear in mind when homeowners consider selling their home, such as the value of their home and what the housing market looks like. Other factors include funds for lender fees that are associated with buying and selling a home, realtor commissions, and closing costs.
Many seniors see the benefits of selling their current home, and downsizing to a smaller property. Some of these benefits include:
• Lower utility bills and other maintenance costs
• Profit margin from selling the first home
• Less work maintaining a smaller home
For many mature homeowners, the pros of selling their first home, and moving to smaller and more affordable property, outweigh the cons of origination fees and other real estate costs.
Taking Out a Reverse Mortgage
However, some seniors simply do not possess the saved funds needed to sell their current home and purchase another one. Unlike applying for a mortgage or purchasing a new home, homeowners are not required to have a good credit score or ample savings to qualify for a reverse home mortgage. Homeowners can finance any accrued charges and/or origination fees associated with a reverse mortgage as well, so there are virtually no up-front costs.
Other older homeowners may desire to stay in their home because they want to pass on the property to their children. In this case, a reverse mortgage can be very appealing.
Because of these crucial variables, reverse mortgage counseling is required for all reverse mortgage applicants; in fact, the counseling session is an eligibility requirement. While counseling can be conducted over the telephone or during an in-person session, a face-to-face session is recommended. Counseling sessions generally last approximately 45 minutes.