Reverse Mortgage – 5 Questions To All Seniors
When we add, that practically every senior can qualify to the reverse mortgage
, if he owns a home, which has equity left. All the costs will be paid at the closing. But te pay-time will come and if a senior understands the bill for the first time, it is a great pitty.
The idea of the reverse mortgage is, that seniors, who are cash poor, but equity rich can turn parts of their home equities into cash money. This will help a lot, because if they have usual mortgage left, they will first pay that away with the reverse loan, which releases money and the amount of their disposable cash increases.
1. Is Reverse Mortgage Meant For Holiday Cruises?
Absolutely not! A senior should always think, that a reverse loan is meant for serious cost increases and that it is a long term investment. A senior should never take a reverse loan for holiday cruises, for instance. It is the money, which he has saved during many years and only in serious cases he is allowed to use it.
2. The Costs Are Really High.
The reverse mortgage loan is never for a short term use, i.e. if you are going to sell your home after a couple of years, but will still take this loan, the costs will be simply too high. Compared to the normal mortgage, this is more expensive. So if you really need money, use this loan type as your last resort.
3. What Do You Want To Leave To Heirs?
Before you will sign anything, talk with the heirs. Maybe they have some other option for your needs. It is wise to let the heirs to know, that you will take the reverse loan, so that they are prepared, that the heritage will be smaller.
4. What Would Be The Alternatives?
If the starting point is, that you will need more cash money every month and that the equity of your home is the only asset, which you have, it is still useful to go through all possible alternatives. Can you take more loan, can you get money from the relatives, can you work for some weeks or months, can you sell the home and to move to cheaper one etc.?
5. Is The Time Right?
You will qualify, if you are American, at least 62 and own a home, where you have equity left. You will get the more loan, the older you are, the lower is the interest rate and the bigger is the appraised value of the home, however the absolute maximum is $ 625.000. The important factor in the formula is the interest rate.
You can choose either a fixed or variable one. As you know, the interest rates follow the economic situation, and if you are lucky and make the agreement during a low interest rate period and take the fixed one, you can save a lot of money.
Reverse Mortgage 5 Questions To All Seniors
By: Juhani Tontti
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