Take this quick, five-question quiz to access whether or not a reverse mortgage is right for you.
1. Are you (and your spouse, if applicable) 62 or older?
The federally-insured reverse mortgage program requires borrowers to be age 62 or older. In order to take out a reverse mortgage and remain on the home title, you and your spouse, if you have one, must both meet the age qualification guidelines.
2. Do you own your home outright, or have a small mortgage balance?
The amount you receive from a reverse mortgage depends on your age, your home's appraised value and the amount of equity you've built up in your home along with current interest rates.
If you owe a large mortgage there will be less equity to tap into. So you will have less equity to tap into.
3. If you still have a mortgage, do you need to pay it off?
A large number of seniors are now retiring with a mortgage debt. This is sometimes challenging on a fixed income. There are about 80% of people aged 65 and older that own homes, however since 2011 at least 30% of them carry a mortgage. Among homeowners age 75 and older more than 21% still have mortgages.
Few people realize that a reverse mortgage can pay off their existing mortgage and eliminate those monthly payments? The HECM program requires a borrower to pay off any existing debt, but reverse loans are not due and payable until you leave the home permanently by death or disability.
4. Are you planning on "Aging in Place", and do you want to make any home modification to achieve this goal?
A staggering 90% of people age 65 and older have indicated a desire to stay in their current home for as long as possible, according to AARP. If that describes you, a reverse mortgage could help you achieve your goal. Reverse mortgages can be used for funds to carry out certain home modifications to enable aging in place.
Remodeling to create a safer living environment could range from installing grab bars in a strategic location to creating low or no-threshold entries or even widening hallways and doorways.
5. Will you be able to live comfortably in your home in the future?
Like most financial products, reverse mortgages come with some upfront fees and costs. For many borrowers, the expenses associated with taking out a reverse mortgage are well worth it down the road. However, if you're only planning on remaining in your home for a couple more years, or you think you may need to move soon because of health issues, then a reverse mortgage may not be the right fit for you.
IF YOU ANSWERED MOSTLY "YES" to the questions above, you may be a great candidate for a reverse mortgage.
If you have any further questions, give Diane, the Reverse Mortgage Expert a call at 314-220-3918 or email fourquits@aol.com.
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