How do you determine if a reverse mortgage is the right option for you? It really depends on your circumstances and needs. Many of us have different retirement goals. More and more seniors are opting to “age in place”. This sometimes requires live in care and that is very costly.
A reverse mortgage is a loan option that enables senior homeowners age 62 and older to enjoy a more comfortable retirement. The homeowner continues to live in the home and pays property taxes, maintenance, insurance and if applicable homeowners association dues. No monthly mortgage payments are required as long as the owner lives in the home. The amount the lender pays monthly is based on the amount of the mortgage.
A reverse mortgage is considered a non-recourse loan. If real estate values decline, neither you nor your heirs are personally liable for any mortgage amount that exceeds the value of the home at the time of sale.
The downside: The loan must be paid off in full when the last surviving borrower “permanently” moves out of the home. If you have a reverse mortgage and you no longer live in your home for twelve consecutive months, you may need to repay the loan in full. This also applies to medical issues such as moving into assisted living. Obviously reverse mortgages draw on your home’s equity. They are due and payable upon the borrower’s death.
Is a reverse mortgage the right option for you? The first step is to speak with your financial advisor and a trustworthy mortgage lender. As always feel free to contact me for a recommendation.