Is a reverse mortgage right for you? Most people know that such a mortgage allows them to get cash from their home, but beyond that it’s a mystery. What’s the purpose of a reverse mortgage? More importantly, how do you apply for one if you know that your family could benefit from it? Our mortgage broker team is here to help. Below are the most important factors to consider when applying for a reverse mortgage, and what you must take into consideration as you decide whether it’s right for you.
Why would you need a reverse mortgage?
Do you have debts you’re tired of paying? What about a vacation that you’ve always wanted to take, but you’ve never had the cash to take it? Perhaps you want to remodel your home or add an extra addition. Getting approved for a reverse mortgage can give you the cash you need to pay for these things thanks to the equity on your home. By advancing you on a certain amount on your equity and locking you into an interest rate, your reverse mortgage will cause your mortgage to increase; if your home value doesn’t change, your equity also decreases. A reverse mortgage can be tricky, and that’s why it’s important to…
Consult with your lender
Using a reverse mortgage to convert your home’s equity into cold hard cash sounds like it should be the best decision in the world for homeowners, but in some cases it’s not. Consulting with a lender can help you realize whether or not you are making the right decision. One of the biggest things borrowers have to consider is that interest can quickly accumulate on the amount you are borrowing. Since this is applied to your main mortgage, you could be seeing thousands being added to your mortgage in a mere few months; contrasted to the equity borrowed, it may not be worth it for some homeowners. If you have a lot of wealth built up over the years and you want to use the extra money strategically and wisely, it may not be an idea.
Are you and your spouse at least 62 years of age? If so, you’ve overcome the biggest hurdle of applying for a reverse mortgage. Moreover, you must also have enough equity in your home to borrow against it. If you don’t have enough equity, you will have to pay your mortgage balance to an appropriate amount where you can borrow. Again, consulting with your lender before applying will tell you whether or not you are eligible.
If you meet the age requirement, can you disqualify?
Absolutely. For starters, the home in question must be your primary residence. The age of the youngest homeowner is also a factor (i.e. if one homeowner is over 62 but the other is in their 50s, your household isn’t eligible). Other factors can come into play, such as your location (i.e. your home’s location can play a part in how much you can borrow) and more.
It’s why it is so important to speak with your trusted lender to ensure that when applying for a reverse mortgage, you have the best chance of getting approved! What are you waiting for? Give us a call right away, and let us fill you in on what a reverse mortgage can do for you!