Is a Reverse Mortgage Loan Right for You?
As a homeowner, you may have heard of reverse mortgages from friends, family members, or on TV. Reverse mortgage loans, including the government-insured version called Home Equity Conversion Mortgages (HECMs), are home loans that enable seniors to access a portion of their home equity without having to pay a monthly mortgage payment. Borrowers are responsible for paying property taxes, homeowner’s insurance, and for home maintenance. This unique feature, as well as several others, are why these loans are popular among retired Americans. However, the important question is, what are these features, and could they help you? Learning more about this loan, gathering reverse mortgage information, and ultimately asking yourself a few important questions can help you get your answer.
Can I Benefit from a Reverse Mortgage?
To answer this question, examine the reverse mortgage’s features, and determine whether you can benefit from what this product offers. For many senior homeowners, these features can prove immeasurably beneficial. The following are just three examples of the features HECM reverse mortgages offer borrowers.
You Can Access Your Home’s Equity
For many borrowers, this is the number one reason a reverse mortgage is the right choice for them. Access to funds from one’s home equity to pay bills and expenses during retirement or pay off other obligations can prove an immense help and an alleviation of financial worry.
You Can Use Your Equity While Keeping Residence and Maintaining Ownership
After building a community and raising children there, accessing equity may come at great sentimental cost. Fortunately, with reverse mortgages, borrowers can now have the best of both worlds by keeping ownership of and residence in their home while simultaneously enjoying the funds from their equity.
You Have the Choice to Use Funds However You Need
Borrowers have different reasons for accessing their equity. Some pay off all credit card debts. Some eliminate the worry of necessary medical expenses. Others prefer not to use funds but rather to simply open a line of credit for emergency use. Whatever the reason, borrowers have the choice to use their funds for almost anything they please.
Can I Afford to Get a Reverse Mortgage?
Like any mortgage loan, HECM reverse mortgages do come with usual closing costs and require the continuation of paying home insurance, property taxes, and basic home repairs. Although you may finance many of the closing costs into the loan and reverse mortgage funds may be set aside for these purposes, it is still very important for all potential borrowers to ensure that they can afford these requirements. If you are unsure how to calculate whether you are able to afford these obligations, licensed American Advisors Group reverse mortgage professionals are available to help you.
Conversely, Can I Afford NOT to Get a Reverse Mortgage?
If you are facing the possibility of foreclosure, suffering from health problems, or suffering a poor quality of life, a reverse mortgage may be a valuable tool to help you gain the retirement you want.
Reverse mortgage loan closing requires the payoff of any existing mortgages, thus helping borrowers avoid foreclosure. Afterward, funds can be used for almost anything borrowers choose, including settling credit card debts. Also, these funds may help borrowers afford good healthcare, nutritious food, or necessary home repairs instead of compromising due to a lack of funds. In short, your reverse mortgage proceeds may provide the value of a comfortable retirement, especially if other options are not available.
Should I Use My Home Equity?
If you are like most senior homeowners, you have spent your entire life working for your home. During your working years, you invested your earnings month after month in a mortgage and building equity. Now in retirement, with perhaps only social security as income, it is time to have your home work for you. With responsible borrowing using a reverse mortgage loan, use of home equity can be a good choice. Examples of such use include using equity to renovate your home to increase its value, supplementing your retirement income, or paying off your other obligations to increase your monthly cash flow. Of course, consulting with your financial advisor regarding these plans is always recommended.
In determining if a reverse mortgage is right for you, it is important to acquire the reverse mortgage information seniors should have. Reach out to a reverse mortgage professional at American Advisors Group, and take advantage of the free personal consultation they offer. You can then examine your specific situation, identify the right reverse mortgage questions and answers, and determine if a reverse mortgage is truly right for you.