If you have dried up all your financial resources, applying for a reverse mortgage allows you to tap into your home equity, provided you plan to live in your home for many years to come, and that you have the means to pay for the costs of the loan.
People who often take advantage of a Home Equity Conversion Mortgage, or reverse mortgage, are often elderly homeowners who may need the cash. It isn’t surprising to know that some consider a reverse mortgage as an easy way to get free money, but this type of loan is far from that. The experts at Primaryresidentialmortgage.com say that there are certain conditions you need to meet and considerations you need to ponder before applying for a reverse loan.
1. Consider Your Costs
Chief among your considerations are the expenses of getting a loan. Although you are not required to pay the balance, you will have to pay the extra costs, such as origination fees and insurance premiums. You will also be responsible for taking care of other costs, such as property taxes and home repairs.
2. Ask for Expert Advice
The Department of Housing and Urban Development requires all homeowners who want to get a reverse mortgage to receive free counseling about their options. This can help them understand the implications of getting a reverse mortgage, and check other options they might have.
3. Shop Around
If there is simply no other alternative, do your best to find the right mortgage company to get the loan. Typically, reverse mortgage brokers and lenders are not as many as standard mortgage firms, but you should look for one that will help you check the interest rates and clarify the additional costs you may incur.
4. Remember, You Need to Repay the Loan
If you move out or sell your home, you or your heirs need to pay the balance. This can complicate matters with your family if they are in the following mindset:
- They don’t know you had a reverse mortgage;
- Your heirs desire to keep the home in the family;
- They simply don’t have the funds to pay off the loan.
In these situations, the heirs could refinance the loan if they have other assets they could use as payment.
Before applying for a reverse loan, make sure you meet the conditions, let your family know all about it, and look for expert advice to know your options.