Top Things You Should Know if You're Considering a Reverse Mortgage

Posted on: 23 July 2021

As an older adult, there is a good chance that the majority of your wealth is tied up in the equity of your home. Because of this, you might be feeling the pinch of not having an income coming in and having to pay a lot of expenses. You might have thought about selling your home, but this might not be something that you really want to avoid if you can help it. Instead, you may want to look into a reverse mortgage, which will allow you to borrow money against the equity that you have in your home. These are some of the things you'll want to know if you're considering a reverse mortgage.

You'll Have to Be a Certain Age

If you are preparing for your retirement now and already have a lot of equity in your home, you might be thinking about going ahead and taking out a reverse mortgage. However, you typically have to be at least 62 years old in order to qualify for a reverse mortgage.

You Have Different Options for Receiving Payment

Depending on your lender and the type of reverse mortgage that you take out, you will probably have different options for receiving payment. You might receive a monthly payment each month from your lender, which can work out well if you don't need a lump sum but will need a little bit of extra money to add to your budget each month. On the other hand, in some cases, you do have the option to take out a lump sum. This might be a better option if you have a major expense that you need to pay off. Either way, you can spend the funds on whatever you want to spend them on.

You Can Still Live in Your Home

The main reason why many retired individuals like the idea of a reverse mortgage is that it allows them to still live in their homes. If you have decided against the idea of selling your home because you love living in it so much but you need extra money, a reverse mortgage might be perfect for you.

You'll Need to Keep Up With Housing-Related Expenses

Once you take out a reverse mortgage, you will still have to keep up with various housing-related expenses. For example, in addition to keeping your utilities paid and keeping the home up, you will also have to make sure that you pay your property taxes and homeowners insurance premiums, so make sure that you fit these costs into your budget.