When it comes to a reverse mortgage, there are certain dos and don’ts that you should be aware of. A reverse mortgage is a financial product that allows seniors to gain access to a subset of their home’s equity to boost their retirement savings.
Even though reverse mortgages have been available for over 25 years in this country, many have doubts about whether or not a reverse mortgage is right for them and their loved ones. Here, we will look into the do’s and don’ts of a reverse mortgage so that you will know what you are getting into before you sign on the dotted line.
Reverse Mortgage Do’s
The first thing that you should do is speak to a trusted advisor, friend, or family member about your plans to procure a reverse mortgage. This is because they may be able to help guide you through the process and bolster your confidence in your decision.
Next, you should use a reverse mortgage calculator to input accurate data. Fortunately, there are many available for free online that can give you accurate data in mere seconds, providing you with an estimate that will help you determine the reverse mortgage that you will qualify for.
Any financial obligations or lien that are tied to your property must be met with the proceeds of your reverse mortgage. Furthermore, you must ensure that all home insurance payments and property taxes are paid in full and on time.
We would also strongly recommend that you keep your home in optimal condition. Thus, it may be in your best interest to use some of the capital that you’ve procured from your loan to fund routine maintenance work on your property.
Finally, most experts agree that if possible, people who take out reverse mortgages should retain a part of the loan. This is done to cover for sudden and unexpected medical emergencies, natural disasters, and other unforeseen expenses.
Reverse Mortgage Don’ts
While there is a myriad of benefits to taking out a reverse mortgage, there are certain instances or scenarios where doing so may be counterproductive.
For instance, we would advise that you do not take out a reverse mortgage if you need a short-term solution (for example, 1-2 years). If you are planning on moving to another home, then a reverse mortgage may not be the ideal solution.
Finally, we would strongly recommend that you avoid taking out excessive amounts of equity from your residence. By doing so, you will be able to retain as much of the equity remaining in your dwelling as financially possible.
If you would like to learn more about the do’s and don’ts of a reverse mortgage, please visit Northwood Mortgage on our website. You can also reach us at 888-492-3690 for a free, no-obligation quote and consultation to discuss your financial needs in confidence.