If you’re one of the millions of seniors approaching retirement with less financial security than you ever imagined possible, you may be overlooking one of your greatest financial assets: your home. If you have paid off your mortgage in full, or almost in full, you may want to consider getting a reverse mortgage loan.
A reverse mortgage loan will allow you to obtain cash, a monthly payment or a line of credit based on the appraised value of your home; will continue to live in your home; And the loan won’t have to be repaid until you leave your home permanently or sell it. A reverse mortgage loan is not the same as a home equity loan, and the older you are, the more of your home’s appraised value will be available to you as a reverse mortgage loan.
Precautions
While a reverse mortgage loan sounds too good to be true, however, there are precautions you should take when applying for one. Many reverse mortgage loan applicants fall prey to unscrupulous loan brokers or lenders who charge undisclosed fees for their services. Those unfortunate applicants end up with far less money than they bargained for.
You owe it to yourself to educate yourself on the entire process that goes along with reverse mortgage loans, so that when you apply for one, you recognize any warning signs before it’s too late.
To qualify for a reverse mortgage loan, you must be at least sixty-two years of age. As mentioned above, you should have paid off in full, or almost, all of the outstanding loans on your home.
Those who owe money on an existing mortgage or home lien will have to use their reverse mortgage loans to pay it off before they can spend it elsewhere. And reverse mortgage loans are binding, so if after committing you find you’re not happy with the terms, you have no recourse.
Find a good lender
The best way to ensure that you will be satisfied with your reverse mortgage loan is to work with a reputable lender. You can easily find the names of various lenders in your area on the National Reverse Mortgage Lenders Association (NMRLA) website; simply enter the name of the state where your home is located and review the large list of names that appears to find lenders near you. All reverse mortgage lenders on this site have agreed to operate under the Code of Conduct established by the NMRLA for the protection of the elderly.
As an added precaution, you may want to have any contract reviewed by an attorney familiar with reverse mortgage lending prior to signing.