The reverse mortgage loan is one of very few mortgages in the country that is actually on the rise. That’s because this loan is entirely different from the standard mortgage and serves a need in the community that exists today. Rather than being a loan that you take out and have to pay back each month, this is a loan that is paid out to you from the lender. The reason that the bank does this is because you are accessing the money through your home equity.
The reverse mortgage loan isn’t for everyone. However, it can be a great way for seniors to finance their retirement and to remain in their homes despite rising home costs. In order to make sure that the loan is right for you, you should ask yourself and your lender the following questions:
– What are the terms of the loan? You need to make sure that you understand the loan inside and out because there are drawbacks to this sort of financing.
– What is the best way to access this money? You can get a reverse mortgage in monthly payments, lump sums or a combination of the two.
– What will the loan be used for? Deciding how to receive the money may depend on whether it’s going to be used to pay off existing debt, fix up a deteriorating home or help cover monthly living expenses.
– What are the upfront costs? Many people don’t realize that getting reverse mortgage loans is really expensive. That’s because the money is taken out of your home equity which means you don’t really see the loss. Make sure you know what you?re paying before you agree to the loan.
– What plans are in store for the house? If you’re planning on moving anytime soon, you shouldn’t take out a reverse mortgage. If your kids are going to buy your house from you at a later date, a reverse mortgage might make sense.
The biggest mistake that borrowers make when getting the reverse mortgage loan is that they fail to really think it through and to make sure that they know what it’s all about. This is not a traditional mortgage so you should treat it as something new that you need to learn about before moving forward on.