With the rising costs of long-term care, it can be difficult to finance the basic necessities later in life. A reverse mortgage is a financial option that may help with financial obstacles by allowing you to access the equity you already have in your home. These loans allow you to receive money for the things you need or want, while you are still living in and owning your home. The money from a reverse mortgage can be used any way you choose. This could include covering monthly living expenses, making home repairs, or paying for health care or long-term care expenses.
Who is eligible?
To be eligible for a reverse mortgage, you must be 62 or older and the home must be your principle residence. Your property is eligible if it is a single-family home, multi-family home, townhouse, condo, or even a mobile home. Even if you still owe money on a first mortgage, you may still be eligible for a reverse mortgage depending on the amount you owe and the value of your home.
How much can be borrowed?
The amount you can borrow depends on your age, the type of reverse mortgage, current interest rates, the value of your home, and FHA lending limits. Furthermore, you can choose to be paid in a lump sum, monthly payments, or a line of credit that allows you to take money as you need it.
Are there costs associated with a reverse mortgage?
Yes. Costs may include an origination fee, closing costs, insurance premium, and often a monthly service fee. Some of the proceeds of your reverse mortgage can be used to repay any existing mortgage and fees associated with obtaining the reverse mortgage itself.
A reverse mortgage is not right for everyone. Your age, the value of your home, and your estate plans are among the factors that can help you determine if it is the right option for you. If you are considering a reverse mortgage, consult with a knowledgeable financial advisor or a certified U.S. Department of Housing and Urban Development (HUD) reverse mortgage counselor.