Are you a senior citizen struggling to get by financially? Do you own significant home equity? A reverse mortgage is a loan product which allows you to tap into that equity and release it as cash.

A reverse mortgage is a good fit for many seniors and can have many excellent benefits. For one thing, seniors can stay in their home. For another, they can use the money in any manner they choose. Finally, in many cases, you may owe no taxes on the mortgage.

You should not jump into applying for a reverse mortgage without thinking carefully over your options however, since it does carry costs.

Here are 4 key questions to ask.

1. Do you qualify for a reverse mortgage? Before you can apply successfully for a reverse mortgage, you need to be sure you meet the basic requirements. Reverse mortgages are only available to seniors, so you must be age 62 or older. Seniors need to own at least 50% equity in your home, and it must be your primary residence. You must be current on property taxes, HoA charges, homeowners’ insurance, and any other costs related to your home’s maintenance. Seniors also are expected to meet certain standards for credit and income. If they are not be able to keep up with their payments after they take out the reverse mortgage, it may not be a suitable fit. If on the other hand you do determine that you will be able to keep up with all of your expenses, it could be exactly what you need to enjoy greater financial flexibility and ease of living.
2. Have you exhausted other avenues for increasing your financial liquidity? If you meet the requirements for a reverse mortgage, you should still consider whether there are any other means of boosting your available finances. Check into aid programs you might qualify for. If you are open to moving out of your current home, think about downsizing or relocating to a more affordable neighborhood. If you are determined to stay in your home and there are no other means of improving your financial situation, a reverse mortgage may be ideal.
3. Can you afford the fees? It is important to remember that a reverse mortgage is a loan, even though you are accessing your equity. Loans need to be repaid, and they do come with fees. What kinds of fees can you expect with a reverse mortgage? Generally, there will be a combination of lender fees and closing costs. Additionally, you will need to think about the premiums and interest you will be paying over time. Don’t forget about mortgage insurance either. If these costs are not an issue and the financial flexibility of the reverse mortgage would be more than enough to offset the inconvenience, it may be a solid option for your needs.
4. Is a reverse mortgage the right choice for your spouse and/or heirs? Finally, there is the complicated matter of your spouse and heirs to consider. If you die and there is no surviving borrower, your spouse and/or heirs could inherit your debt. At that point, the surviving spouse or heirs have two options. Either they can pay off the loan and keep the house, or they can sell it. Whether you want to involve your heirs and/or spouse in the decision-making process is up to you, but it is best to communicate with all parties involved. That way everyone knows what they can expect going forward.

Grandview Lending is Your Reverse Mortgage Experts in Indianapolis

Don’t know whether a reverse mortgage is the right choice for you? Grandview Lending can go over these and other important questions and considerations with you and help you figure out whether the benefits would outweigh the costs. Get in touch with us today at (317) 255-0062.