In the right situation, a reverse mortgage can be the best financial solution for you. However, you’ll need to weigh the pros and cons carefully to make sure you aren’t making a big mistake, one that could derail your financial goals.
Do You Need It?
Are you using this to fund a trip around the world? Then this might not be the best course of action to take, says the American Association of Retired Persons. Looking for funds to invest? Then this is not a good plan either. These loans are best used for financial emergencies. If you or a loved one gets sick, if you require long-term care, or if you have to do extensive repairs on your home, getting a reverse mortgage can help you cover all those costs.
Can You Afford It?
These come with fees and interest. You’ll also need to factor in the property taxes you’ll have to pay for in the future. Failure to comply with those payments could cause you to lose your home. Assess your finances to make sure you have enough funds to cover these costs. Shopping around could help you net lower interest rates too. Ask and compare reverse mortgage quotes to get the best one.
Can I Use My Home Equity Now?
Yes, but keep in mind that the more equity you use up now, the fewer resources you’ll leave yourself for later. If you want to make sure you won’t live out your retirement years cash-strapped, perpetually trying to make ends meet, then it’s best to leave that equity alone for now.
Is It Right for Me?
Do your homework. Know what you need and consult a financial advisor or HECM expert to help you figure out if you’re making a sound choice or colossal mistake.
Hopefully, these questions will help point you in the right direction. Good luck! Browse this website for more information.