You cannot relax when you retire unless you feel secure. There is no way to feel secure when you do not have the money you need to survive comfortably. Whether basic bills are a concern or you simply worry about having nothing to fall back on, it is a situation you have to correct. Your home is an asset you can use to do exactly that. A reverse mortgage lets you use it to your financial advantage.
Why is it Called the Retiree-Only Home Loan?
A reverse mortgage is often called a retiree-only home loan, but that is a bit of a misnomer. The truth is you can get one without being retired or while being only semi-retired in some circumstances. The main requirement is actually that you cannot be younger than 62 years old. You also cannot apply for a reverse loan for a property you own unless there is a dwelling on that property and you use that dwelling as your main home.
What Are Government Versus Proprietary Reverse Mortgages for Your Home?
There are two categories of reverse mortgages to consider. One is a proprietary home loan. That refers to a home loan offered via a private lender, such as a credit union or your local bank. You can see what they have to offer at your local lending institutions in the way of such loans. Alternatively, you can visit a government agency.
Many government agencies offer their own versions of reverse mortgages. They are called home equity conversion mortgages. Those so-called HECMs are no different than proprietary loans on the surface, except they offer federal insurance. However, there can be some large differences in the fine print of the loan contracts for HECMs versus proprietary reverse mortgages.
Do You Need to Worry About Interest Rates
No matter what type of reverse mortgage you choose to get, interest rate is one thing to watch for. Interest rates are regulated to a certain degree, but proprietary loans are particularly prone to variation in interest rates. The interest rate on a reverse mortgage is particularly important because of the duration of the loan. While a traditional mortgage might end in five years or less, a reverse loan can last many more years. That gives the interest much longer to add up.
Is it Possible to Have a Reverse Mortgage and a Regular One?
A traditional mortgage that already exists should not deter you from applying for a reverse loan. You can apply for one while the other is active. However, you have to agree to repay a traditional loan immediately, if you receive reverse loan approval. The money to do so comes out of the total the reverse mortgage allows you to receive. That process can help you rid yourself of a traditional mortgage bill, but it also means you will have less “free and clear” reverse mortgage money to spend when you are done settling that debt.
Is There a Way to Cancel or Adjust a Reverse Mortgage?
There are several ways to cancel or adjust a reverse mortgage, but doing so is not always easy. For example, it is possible to add a spouse to your contract after the fact, if he or she meets qualifications. You can also refinance a reverse loan, if you choose. Additionally, you can get out of a reverse mortgage without repaying your debt, but only if you are comfortable vacating the property and allowing the home to be sold.
Is Signing a Reverse Mortgage Agreement Reasonable for You?
The final choice about whether to get a reverse mortgage is entirely yours. That is why you have to make sure the agreement sounds reasonable to you. Analyze the rules of the loan. Ask questions. Make sure you are completely comfortable. Only then should you sign a contract.