Guidelines to Reverse Mortgage
Reverse mortgage is considered to be a solution to money problems of the elderly. This can also be helpful in making your retirement easy and joyful. This reverse mortgage needs to be handled with the help of qualified professionals as this is definitely confusing as the interest along with the fees can use a big portion of the equity of the homeowner. This mortgage allows a homeowner to borrow against the equity built up in a home. This can supplement the income and you can yet remain in the present home. Before you opt for this it is necessary to consider specific factors.
1. Reverse Mortgage entails:
You need to be aware that the reverse mortgage is only for those who are 62 years of age and are living in the home as a primary residence. This mortgage is different from the other conventional mortgages. This mortgage is set in a way that the lender makes payments to you. The amount received depends on the home value. You can keep the title of the home but you need to pay property taxes, homeowner’s insurance and also look after the maintenance of the home.
2. Different Payment options:
There are multiple ways you receive funds from the reverse mortgage. You can choose between the line of credit, receiving a lump sum of money or probably a payment on a monthly basis. You can also opt for a combination. For the apt choice, a homeowner needs to chart out how the money will be spent and for what this is required.
3. Fees involved:
It is important to find out the smallest of details with the reverse mortgage. There are initial costs which include fee for loan origination, closing costs and an appraisal fee. For apt understanding of the loan you will need the help of a counselor. There is a possibility of you paying the fees for loan servicing and also for the mortgage insurance. The total closing cost works out to nearly 3 to 4 percent of the value of a home.
4. Checking equity:
For maximum benefit of the reverse mortgage it is important that you have enough and more of equity in your home. A financial advisor can help you out if you carry a small mortgage in retirement.
5. Long Term Planning:
The reverse mortgage is repayable when you pass away or if you re-sell the house or move out. In case you have decided to move after a specific time span it is wiser to consider the other options available for the required cash flow.
6. Using reverse Mortgage:
Before opting for this option of the reverse mortgage it is important that you decide on what the money will be spent. The age can make a difference to the spending of the mortgage. Those of you who are 60 and above, need to ensure that the money is not wasted on frivolous expenditure.
It is advisable to conduct a thorough research for the apt reverse mortgage and not get swindled easily. Seeking professional help can work out safe.