What Is A Reverse Mortgage And Should You Get One

What is​ a​ Reverse Mortgage And Should you​ Get One?
Who qualifies for a​ reverse mortgage?
You must be at​ least 62 years old and have equity in​ your home.
You have equity in​ your home if​ your home is​ worth more than you​ owe on​ it .​

Here’s how it​ works
When you​ bought your home,​ the​ bank loaned you​ the​ money to​ buy it​ and you​ paid them back with monthly mortgage payments.
A reverse mortgage is​ the​ opposite .​
With a​ reverse mortgage,​ the​ bank pays you​ a​ monthly payment from the​ equity in​ your home.
You repay the​ money when you​ sell your home,​ refinance,​ permanently move out,​ or​ pass away .​
At that time,​ you​ or​ your heirs must repay the​ loan plus interest in​ one payment .​
How do I​ get a​ reverse mortgage?
Reverse mortgages are available through most major banks and lenders.
Here’s what happens when you​ contact the​ lender:
An appraiser will determine the​ value of​ your home .​
The lender will tell you​ how much you​ qualify for based on​ your age,​ the​ equity in​ your home,​ and the​ cost of​ the​ loan .​
You decide how you​ want to​ receive the​ money .​

You can receive the​ money:
As a​ lump sum
In monthly payments
As a​ credit line that lets you​ decide how much of​ the​ loan to​ use,​ and when to​ use it​
You sign a​ contract .​
The contract will outline the​ payments you​ will receive and the​ amount you​ have to​ repay including interest .​
Maintaining your reverse mortgage
To keep your reverse mortgage in​ good standing you​ must:
Pay your property taxes on​ time
Maintain and repair your home
Have homeowner’s insurance
Your lender can end the​ reverse mortgage and require immediate repayment if​ you:
File for bankruptcy
Rent out part of​ your home
Add a​ new owner to​ title
Take a​ new loan against your property
Things to​ consider
Reverse mortgages are more costly than typical home loans or​ home equity credit lines .​
They also have higher interest rates and fees .​
Interest is​ charged on​ the​ outstanding balance and is​ added to​ the​ amount you​ owe each month .​
This means that your total debt increases each month .​

Keep in​ mind that you​ are borrowing equity from your home .​
This means fewer assets for you​ and your heirs .​
Shopping for a​ reverse mortgage
Shop around and get offers from several lenders .​
You should compare the​ terms,​ and look for a​ loan with the​ lowest interest rate,​ points and fees.

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