Do You Qualify for a Reverse Mortgage?
Reverse mortgage lending has gained a lot of popularity with senior homeowners lately because the money seniors receive helps them live in your homes longer and more comfortably. However, all prospective borrowers must meet with an independent counselor before they are able to apply for a reverse mortgage program.
Financial counseling sessions are designed to not only offer financial guidance to prospective borrowers and inform them of their rights and responsibilities, but also to outline the alternatives to reverse mortgages.
To avoid wasting your time and energy, ask yourself the following questions before you schedule your independent counseling session. If you answer ‘NO’ to any of these questions, a decision in favor of a reverse equity mortgage may be premature, impractical, or ill-advised:
Do the benefits of home ownership clearly outweigh the burdens, now and in the foreseeable future? You will have to ask your counselor about potential reverse mortgage cons. If you are sick or don’t expect to live in your home much longer, than a reverse mortgage loan may not be for you.
Can you relax and enjoy the money from the loan, knowing that debt is compounding against the value of your home? Reverse mortgage loans usually end in the sale of your home. You need to understand and accept this fact when applying for a reverse loan.
Can you accept full responsibility for home maintenance, taxes, and insurance? Failure to meet these obligations could cause the lender to request full repayment of the mortgage debt. You will still be responsible for maintaining your home and paying taxes and insurance. You can ask your lender to set aside part of your loan like an escrow; however not all reverse mortgage lenders will provide this service.
Can you financially manage if your home equity is substantially exhausted, and/or if you need to move into alternative housing? You will have to budget after your loan is exhausted. You should know the value of your home and the amount of equity you have in your home when evaluating your reverse mortgage info.
Do you know the alternatives to a reverse mortgage? You should explore all other alternatives available to you. When you secure a HUD or jumbo reverse mortgage, you will be unable to rent out part of your home, or reside in an assisted living facility. These options may be possible alternatives.