Once you reach the age of 62, you get the option of tapping into your home equity by taking out a reverse mortgage. This can help you if you are struggling with funds after retirement or want to make a major purchase, for example, another house in Ocala, FL.
Taking out this loan is a decision that will affect your life on many different levels, so you need to consider it carefully. To determine whether it’s time for you to apply for a reverse mortgage, you should answer the following questions:
- Is there another way to achieve your goal?
You should always look into all options in order to choose the best one. Your home equity is a valuable asset, so you need to be sure that taking a reverse mortgage is your best solution.
- Is there a chance you might need to tap into your home equity for another purpose in the future?
For example, if you have no heirs and suffer from a medical condition that will cause you to require assisted living or long-term care in several years, you might wish to save this option for the future.
- Do you have any additional income?
A reverse mortgage will provide you with a certain amount of money regularly, but you need to be sure that you have enough funds to cover your taxes, homeowner’s insurance, and other relevant bills.
- Do you want to leave your home to your heirs?
This loan may make it impossible for you to leave the home to your heirs. Consult a financial specialist and an experienced real estate agent. These specialists can provide you with the essential information about your home equity, help you calculate your chances of paying off this loan, and advise you regarding the other options available.
- Do you plan to stay in this home for a long time?
Remember, taking out a reverse mortgage is a wise option only if you plan to stay at this home for a while. Otherwise, you will just waste your money paying the large insurance premiums that are included in this type of loan. Another factor to consider is the upfront cost. Reverse mortgage loans always have high upfront costs, and if you sell the home in a few years, you may not benefit from them.
- Does your partner or spouse want to continue living in the house in case of your death?
If the answer is yes, you will need to make this person a co-borrower, otherwise, they will be forced to either leave the house or pay off the loan in full.