Are you able to sell your home and move into a cheaper property?
Many people are not willing to simply sell their current home, and move into one that is half the size and half of the value. This might seem like a big step at first, but when you consider how much equity it frees up for you and your spouse, then it’s not such a bad route.
If you are absolutely set on staying in your home as your primary residence for the rest of your life, and your family is comfortable with a reverse mortgage, then it’s not a bad financial route to take.
Is your spouse prepared for a reverse mortgage?
In the past, spouses where liable for the loan as soon as their significant other, the borrower, passed away. This has been reformed recently however, and it’s now much easier for the remaining spouse to continue living on the property if the borrower passes away.
There are some conditions to how this is handled though, so it’s important to speak with a financial counselor about this aspect of a reverse mortgage. With some planning in advance, with both your spouse, financial advisor, lender, and family it’s possible to determine the best plan of action for yourself way before the borrower ever passes.
Are your heirs comfortable with the idea of a reverse mortgage?
Contemplate whether your next of kin are going to be upset when they find out they could potentially have to sell your home. If no one in the family is particularly attached to your home, then it’s not such a bad idea to take out a reverse mortgage, and then just have your family sell your property after you’re gone.
If your family adores your home though, and the cherished memories created there, they’d better ensure they have a plan for paying off the reverse mortgage after you’ve passed. Check reverseyourmortgage.org if you want to continue examining reverse mortgages in depth.
Just make sure you do the math and examine your budget before considering a reverse mortgage, that way if you were planning on leaving an inheritance for your children, that will still be possible.
Will you be able to afford homeowner’s insurance and property taxes?
If you’ve lived in your home long enough then you’re probably familiar with the amount owed in property taxes and insurance annually. As long as you’ve looked at your financial situation to determine that you can still afford homeowner’s insurance and property taxes with a reverse mortgage then you’ll be good to go.
Do you have a trusted lender and financial advisor in mind?
Don’t just go with any old reverse mortgage lender, ask around and see if your friends and family have some excellent recommendations for you. If you’re the first person you know who is going after a reverse mortgage loan, then make sure you do your due diligence before choosing a lender.
These are primarily all of the questions you will need to ask before choosing a reverse mortgage for your home and finances. Talk to a financial advisor and make sure you can afford all the expenses that come along with a reverse mortgage, like closing costs, origination fees, and mortgage insurance premiums.