If you desire a comfortable retirement, you may find yourself needing more available money. It is a common situation to retire and suddenly lack the income you are used to.
When you need that income to cover basic costs or emergencies, it has to be replaced. If you are thinking of replacing it with a reverse mortgage, you need to know your reverse mortgage choices. The details below can help.
Can You Get a Reverse Mortgage?
One thing you have to determine to start is whether or not you can actually get a reverse mortgage. Basic requirements for you are being at least 62 years of age, owning the home, and living in it. That means you cannot apply for a reverse loan on a property on which you do not reside.
The home itself also has to qualify in order for you to receive a reverse mortgage. In general, it can qualify if it is a single-family home or a building with only a few apartments.
The home value also needs to be assessed. That includes the total value, as well as any factors affecting that value, such as a current traditional loan already in effect.
That is why purchase calculators for reverse-loans are used. They allow online fast assessments of homes for reverse mortgage purposes. Once a calculator figures out what your home is worth, it also figures out how much of that worth you can convert into funds you can use.
What Size Reverse Mortgage do You Need?
There are two categories of reverse mortgages known as regular and jumbo reverse loans. The government establishes how much you can borrow using either one. However, jumbo loans always have higher borrowing limits than regular loans.
The reverse mortgage calculator’s findings will have a direct impact on your decision. If it determines your property is high in value, a jumbo loan might be in order.
Where Should You Get a Reverse Mortgage?
Another choice you have is where to get a reverse mortgage. Proprietary loans are offered privately, while home equity conversion mortgages are offered by federal agencies. Both work in similar manners.
However, proprietary loans vary more in their rules because, other than some specific government regulations that must be followed, the lenders establish their own regulations.
The size of the mortgage you want can also affect the source of your mortgage. Not every lender offers jumbo reverse loans. If you need one, you might have to look more intensely to find a good source.
No matter what size loan you want, always check the details before signing an agreement.
Do You Need All of Your Money Right Now?
When you apply for a reverse loan, you also need to decide when you want your money. You can request all of it immediately, which is similar to how most traditional loans work.
However, you can also ask for a line of credit to be opened. That allows you the flexibility to withdraw funds when you have the need for extra cash, such as during an emergency.
Those options may sound tempting, but it is also likely you are applying for a reverse loan due to general financial distress. If so, you can ask the lender to establish a payment plan.
Under that plan, you can receive the same smaller amounts repeatedly on a set schedule. Such an option is ideal when you are dealing with repeated, predictable expenses you have to pay.
Do You Need More Information?
A final choice you have is whether or not you need more information before signing a loan contract. The answer is almost always yes. If you have any questions at all, ask them.
Make sure you receive satisfactory answers. Talk to a reverse mortgage specialist not affiliated with the lender you are considering, if you have doubts.
Featured Image | Tierra Mallorca on Unsplash
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This is a useful guide and definitely something to think about for the future!
I find the concept of reverse mortgages quite interesting, this is really handy! Good info to know!