What exactly is a Reverse Mortgage? Over the last few years more and more people over the age of 62 have asked this question. Essentially a Reverse Mortgage is a federally insured mortgage that allows people 62 or older to borrow money against the equity in their home. This may sound like a no brainer decision but it truly depends on each individuals circumstances.
First off, if you are considering a reverse mortgage you need to sit down with a federally certified housing counselor. This person will be able to help you determine if this type of mortgage will benefit you depending on your goals. This session should take about an hour, so if someone is not taking the time with you to answer your questions, than move on to someone who will.
Second, you need to understand that you are only borrowing on the equity that the home has. Like other mortgages, there are closing costs involved as well which will be deducted from the total of what you are borrowing.
Third, if the mortgage is for a couple, it is best that it is in both your names. One of the stipulations of this particular mortgage is that the borrower must remain living in the home. So if you are a couple, that means that if only one of you has the mortgage in your name and that borrower ends up moving to assisted living or a long term care facility, then the spouse will have to move.
Lastly, can you afford the ongoing expenses necessary to make sure you can stay in the home? Even though your mortgage essentially is paid, you are still responsible to stay current on taxes, insurance and any homeowner fees.
So if you are thinking about a reverse mortgage, make sure you are getting all the information and understand what it means when you are no longer able to stay in the home or when you pass away. I found this article from the AARP very informative. Take a look.
Kimberly Gryder
REALTOR
Senior Real Estate Specialist
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