Reverse mortgages are not always the best step for everyone, but when looking at the positives, the reverse mortgage is managing to come out ahead. There are other alternatives like a home equity loan or downsizing to a smaller residence with fewer expenses but for the older homeowner in pursuit of more cash, reverse mortgages can work great.
The Positives of a Reverse Mortgage
• One of the primary benefits of a reverse mortgage is that you can remain in your house. To lose your home, you would have to stop paying property taxes.
• The second major benefit is that you can have readily cash available on-hand when you need it.
• Today’s reverse mortgages are simpler and have limits on them. People applying for these types of mortgages must be given advice, so you’re not going in blind.
• A reverse mortgage can make life more comfortable for older people.
Are you the Perfect Candidate?
There are people that use money frivolously for luxuries and for those falling into this category, you should be cautious before taking out a reverse mortgage. Reverse mortgages are really for those who need to subsidize their retirement income.
Before approval, you are required to meet with a counselor to discuss reverse mortgages, how they work, your expectations and alternatives you may qualify for. But a good candidate doesn’t simply mean eligibility – is this type of mortgage right for you and your needs?
Take a look at this checklist;
You and your spouse are 62 years of age or older
The house is your principal residence
You have lived in the house at least six months out of the year
You have a lot of equity in your house
You want to pay down debt
You do not plan to move
You are not receiving SSI or money from another government sponsored program
You have considered the alternatives such as moving to a smaller, less expensive residence
You understand that the time you have to change your mind is limited, more like 3-5 days
You probably already have an idea of what you could take care of with a reverse mortgage. Feel a sigh of relief, some breathing room for those overwhelmed with bills; but do you know what not to do with your money?
Great responsibility will befall you once you get a lump sum of money. While thinking of a more comfortable life, get some advice from a financial planner to see how to handle your money.
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