A reverse mortgage is the right financial option for grey haired individuals in the US that want to supplement their post-retirement income. The loan option works opposite to the traditional mortgage loan in that payment is received and equity in the home is transferred to the lender.
Are you thinking about applying for a reverse mortgage loan? Here are X questions that you must discuss with the reverse mortgage specialist before closing the deal.
Q.1. What are the costs involved with the loan?
A borrower will have to pay different costs and fee to the lender. Some of the costs include loan title fee, charges, escrow payments, and others. You must ask the reverse mortgage specialist about the specific costs before signing a deal to ensure that the loan options fit your requirements.
Q.2. Will the reverse mortgage affect Medicaid or Supplemental Security Income (SSI)?
A reverse mortgage does not generally affect Medicaid or SSI as long as the cash advances are spent fully each month and is not accumulated. That being said, the loan programs requirements differ by state so it’s suggested that you ask the reverse mortgage specialist about it.
Q. 3. Are there any upfront costs?
Lenders usually charge origination fee when you sign the deal. You should be clear about the upfront costs before signing any deal from the reverse mortgage expert.
Q. 4. Can the borrower own more money than the value of the home?
Make sure that the lender does not charge extra for the loan. Keep in mind that the reverse mortgages come under the category of non-recourse loans. You can be rest assured that you will not be charged more money than the value of your property irrespective of the loan balance.
Q. 5. Are there any responsibilities as a borrower?
Lenders require that you make maintenance, insurance, and other property related payments. Moreover, there are certain restrictions such as living on the premises throughout the duration of the loan period etc. Ask the mortgage expert the additional responsibilities that you may have as a borrower.