Asking questions about any type of financial product is critical to ensure you fully understand the benefits and any possible drawbacks. Talking to reverse mortgage experts is essential before you decide if this the right decision for you and your family.
For most people over 62, a reverse mortgage or Home Equity Conversion Mortgage is a very effective way to access the equity built up in the home without having to sell the property. The very structure of a reverse mortgage means that access to the lump sum or other payment option you choose doesn’t require any repayment, as long as one of the borrowers still lives in the home and other requirements are met.
Repayment Options
One very important question to ask reverse mortgage experts is about the repayment of the loan. As with any type of loan, the reverse mortgage will have to be repaid at some point. For most homeowners, this will be when the final borrower is no longer living in the home or if the property is sold.
In the case of the last borrower living in the home at the time of the death, the heirs to the property will repay the loan to the reverse mortgage lender. The payment can simply come out of the proceeds of the sale, or the heir can choose to take out a traditional mortgage to pay the reverse mortgage or pay off the loan with savings or other means.
Living Out of the Home
For elderly individuals, it is important to ask about how long you can live outside of the home before repayment of the loan is required. This will be an essential consideration if the elderly borrower or borrowers are likely to need nursing home or long-term care out of the home.
Generally, 12 consecutive months is the time frame for the borrower to be living out of the home. This time does allow the borrower or the family to plan the repayment or complete the home sale.
Independent Counseling
The best reverse mortgage experts will provide individual counseling for those individuals or couples considering a reverse mortgage, as this is government mandated. While a reverse mortgage is often a good choice, for some people with limited income or who are significantly in debt, it may not be a good option.
Ask the reverse mortgage company to connect you to an independent, federal government-approved counselor. This is a necessary step required by the government and ensures that the borrowers are fully informed of the fees, the long- and short-term financial implications, and if there are other options to consider.
By working with a top reverse mortgage company and also talking to an approved and independent financial counselor, you will have the information necessary to determine if this is the right decision for your financial future.
The reverse mortgage experts at Longbridge Financial are here to help you in determining if this is the right financial option for your unique financial needs.
