The right tool can make or break your finances, so know what you’re getting into before you go for that reverse mortgage:
You’ll pay for a ton of charges and fees.
There will be other fees and charges. Lenders will charge you an origination fee. You can also expect to shell out money for closing costs. Servicing fees throughout the period of your mortgage may also apply. So be sure your bank account can cover all the necessary costs. If you plan on getting a federally-insured HECM loan, you’ll even have to pay for mortgage insurance premiums, says the Federal Trade Commission.
You’ll keep paying for other home-related costs.
That includes the insurance taxes on your property as well as the homeowner’s insurance you have. You must also have enough funds to keep the home in tip-top shape. If you fail at any of these, you could end up having to repay the loan or risk forfeiting your home. Therefore, know which arrangements work for you to ensure you can keep up with all the payments you need to fulfill the terms of your reverse mortgage.
You’ll want to co-sign that paperwork.
A lot of spouses make the mistake of signing the paperwork on their own. Make sure you co-sign it with your spouse. That way, the surviving spouse can continue to live in the home even after the other has passed away, and still continue to receive HECM payments. The surviving spouse must also fulfill the terms of the loan agreement by paying off the costs associated with the property.
Your interest rate might change.
Most reverse mortgage loans have variable rates, which are affected by market changes. So, while variable rates offer you more flexibility in how to get your money, it can also drop or soar over time.
So know what a reverse mortgage might mean for you and your family. Consult a professional for more information. Longbridge Financial, LLC can help you choose the best reverse mortgage options for your current situation. Contact them today!