Should you or Should you Not Take a Reverse Mortgage as a Senior Citizen?
Reverse mortgages have been an attractive option for most retirees, but just how safe are they for you and your heirs? The last thing you would want is to land in a deeper financial pitfall by making a costly misinformed decision on reverse mortgages. Here is a guide to help you have more in-depth knowledge on reverse mortgages and how you can make them work to your advantage. First things first, what exactly is a reverse mortgage? Reverse mortgages are a special category of home loan that is sold to retirees and seniors who are above the age of 62. Ideally, it is a type of loan that gives you access to cash by using your home as your security.
A reverse mortgage is different from a traditional mortgage because you will not be expected to make any payments on a monthly basis as is always the case. Instead, the interest and fees payable will accrue and be added to your mortgage balance each month, increasing your mortgage balance while decreasing your home equity. Ultimately, you get to repay the mortgage when you or your loved ones sell the home. Take the time to find a reliable and informative website with more info on reverse mortgages so you can make an informed decision.
That said, no doubt reverse mortgages have their good side, but they also have some drawbacks worth noting so you can decide whether or not you should apply for one. For starters, you should know that even when you take this loan, you will still be expected to pay for all home maintenance costs including home repair costs, property taxes, home insurance to mention but a few. Should you miss making any of these payments, you will have yourself to blame when the lender closes out on loan.
There are some important considerations you might want to factor in when you are thinking of taking a reverse mortgage. To get you started, it is important to check and exhaust all other options available at your disposal that may allow you to meet your financial obligations. As is with any other home loan, it is always best to leave home equity as the last resort when all else fails.
You should also consider whether or not you have any heirs you may wish to leave your home for as inheritance upon your demise. Remember the only way to pay off the mortgage is by selling the house thus if there are no savings and investments, you risk leaving behind homeless heirs upon your demise. Take the time to read more about reverse mortgages and in particular the terms and conditions.