If you're near retirement age, you might be looking into information about a reverse mortgage on your home. A reverse mortgage allows you to get the equity out of your home so you have extra funds for retirement, and the benefit is that you can continue living in your home. Here are a few things you may want to know.
You May Need To Attend Counseling Sessions First
Your lender may require you to take counseling before you apply for a reverse mortgage. This is an important step because it helps you understand exactly what happens and what your rights are. The reverse mortgage could affect the rest of your life and the inheritance of your heirs, so knowing how it works is important. Plus, a counselor can plug in your personal financial details and help you decide on the best way to take the money out of your house. You'll also learn about things that could put your mortgage in jeopardy such as moving to a different address, not paying insurance, and not keeping up with repairs.
A Reverse Mortgage May Be Reversible
Depending on the circumstances of your loan, you may have three days after you sign the papers to change your mind and cancel the mortgage. You might also be able to reverse the mortgage later if you decide you want to move or other life situations arise. To do that, you'll need to pay back the reverse mortgage. You might need to sell the house to get the money if you don't have cash in the bank to buy it back. Ideally, you'll enter into a reverse mortgage with the plan to live in the house until you pass away. However, if you take out a reverse mortgage early in your retirement, you may decide in 10 or 15 years that you want to move or you may no longer be able to keep up with maintenance. Knowing you can pay off the mortgage and reverse it might make you feel safer about obtaining a reverse mortgage, but you'll want to discuss this option with the loan counselor and lender.
The Amount You Get Depends On Your Age
A few factors determine how much you get with a reverse mortgage. The value of your house, the economy, the amount of equity, and your age are all considered. If you take out a reverse mortgage when you're younger, you won't get as much as you could if you wait until you're older. Therefore, you'll want to plan the timing of your reverse mortgage carefully, so you get the best benefit from it.
A reverse mortgage can give you peace of mind when you're in your retirement years that you'll always have a place to live and you'll be able to use the equity built up in your home as well.Share