Is a Reverse Mortgage Right for Me?
It is true that HECMs are not for everyone. New underwriting requirements ensure that only qualified borrowers age 62 or older are able to access the program to meet retirement goals. As part of the application process, you will receive counseling by an approved third party. Additionally we will assess your financial situation to ensure it is suitable for the program. We will ask you questions about your goals, your home and your finances as we discuss your options. You can rest assured that if we ever feel like this is NOT the best option for you…WE WILL TELL YOU SO. Not all lenders will make that pledge!
It’s usually a good idea to gather information and explore your home equity options early so you can discuss important financial decisions with family or advisors you trust. Longbridge will provide homeowners with the facts and details they need to decide if they wish to apply for a reverse mortgage. Here are some questions to consider before applying for a reverse mortgage:
Do you need to tap into your home equity now or should you save it for an emergency?
Tapping home equity is a big decision. In the past, most homeowners were advised to save equity for emergency situations. But recent studies published in the Journal for Financial Planning suggest that tapping equity earlier and retirement funds later might be a better strategy for extending the life of your assets. Setting up a credit line for future use can be a great way to protect yourself from downturns in the real estate market and ensure that the equity you have today will always be available if you need it in the future.
Are you on a fixed income with no other assets?
If your income is below $1000 per month, a reverse mortgage might not be the best option for you. You will need to be certain that your income allows you to keep up with your obligations – if you take out a reverse mortgage loan and then have trouble paying your property taxes and homeowner’s insurance, you could face foreclosure.
How long do you and your family plan to live in the home?
In most cases, a reverse mortgage makes more sense if you plan to live in your current home for at least 3-5 years. The FHA insurance, which is there to protect you and the lender in case your loan balance ever grows to be more than your home is worth, carries an up front premium. That premium and the closing costs associated with any home loan can make Reverse mortgages an expensive way to borrow money if you don’t plan to stay in your home.
How will you pay for property taxes and homeowner’s insurance?
It’s important to have a plan for how you will pay for property taxes and homeowner’s insurance. If you fall behind on either one, it could cause a foreclose on your reverse mortgage.
Does your spouse or partner want to keep living in the house if you die?
Discuss this question carefully with your spouse/partner. If either one of you are a co-borrower, both you and your partner will be able to keep living in the house even if one of you dies. If you take out a reverse mortgage without your partner as a co-borrower, then your partner will have to repay the loan or take out their own mortgage (reverse or forward) to remain in the home.
What is a Reverse Mortgage
Reverse Mortgage Facts