Reverse mortgage companies, the unscrupulous ones, took advantage of retirees in the past by exploiting the needs of the Seniors. But that is all in the past as the Federal Housing Administration and other government agencies have made sure that the retirees enjoy the benefits of reverse mortgage according to its original intention.
A reverse mortgage is an opportunity for retirees to enjoy their retirement debt-free, and it can give you the funds you need for your home improvement plans and even your vacation. The goal is for retirees to have financial liquidity and enough legroom to do what they want with their lives.
The most common form of a reverse mortgage is the one that is insured by the FHA – Home Equity Conversion Mortgage (HECM). If you are 62 years and above, you can apply for a reverse mortgage and not worry about repaying it monthly. Your primary residence becomes the collateral of your reverse mortgage. The loan is deemed demandable when you die or need to transfer to another residence – assisted living or otherwise. When your reverse mortgage ends, you can repay the loan by selling the house.
Consider the following before your visit one of the reverse mortgage companies in the market:
- Your spouse – if you are the principal borrower and your spouse is excluded as an applicant of the mortgage, when you pass, the reverse mortgage company will evict the surviving spouse from your home. To remedy this, you might consider including your spouse in the mortgage as a co-borrower.
- Your age – the minimum age required by reverse mortgage companies is 62 years old. If you take out your reverse mortgage too soon, you might outlive the mortgage. So, it is advisable to take out the mortgage as late as possible.
- Your heirs – they can sell the property to satisfy the loan, or they can choose to repay it. If the reverse mortgage is FHA insured, they would only pay 95% of the home’s appraised value or the full loan balance, whichever is lesser, and keep the home.
If you need more details, you can talk to property experts or reverse mortgage companies about the options available for you.