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Carolyn Hopkins was single, 65 years old, and in financial turmoil when she buried her father. She was only able to work part time while she cared for him the last few years. Carolyn’s only asset was her recently-inherited home that was paid off but in desperate need of repair. She spent sleepless nights worrying about how she was going to pay for living expenses, let alone her $50,000 in debt.
Many senior citizens living alone find themselves in similarly-stressful situations. Finance of America Reverse, LLC offers solutions, like reverse mortgages.
Reverse mortgages allow seniors to tap into some of their home equity to provide a line of credit or cash (available in one lump sum or monthly payments). The exact amount is based on your interest rate, value of your home and life expectancy. Repayment on the loan is not necessary unless you fail to meet your loan obligations, the home is sold, or the last remaining borrower moves out of the house.
A reverse mortgage is an ideal way for seniors to supplement their social security and retirement income, allowing them to pay off medical debt, stay in and renovate their homes, save for long-term care, and put cash in their pockets.
If you plan to stay in your home a long time
A reverse mortgage makes most sense if you plan to live in your current home for a long time. The longer you stay in your home, the longer you can take advantage of the benefits.
If you have a lot of home equity
The more home equity you have, the more a reverse mortgage might make sense. The best candidates for reverse mortgages have either paid off their homes or they have only a small balance remaining.
If you are young(er) and healthy
The younger and healthier you are, the better deal a reverse mortgage becomes. Not only will you be able to take advantage of the money longer, you are more likely to get a larger loan.
If your kids don’t want your house
A reverse mortgage must be repaid when you die or fail to meet obligations. If your heirs don’t plan on keeping your home, the loan can be repaid by selling the house.
When a reverse mortgage is NOT the best option
If you are under the age of 62
The Federal Housing Administration requires all borrowers on the title of a reverse mortgage to be 62 years or older.
If you can’t pay off your mortgage
If you haven’t paid off an existing mortgage and it can be paid off with the proceeds from a reverse mortgage loan, then this type of loan probably doesn’t make sense for you.
If you can’t cover the cost of owning the home
A reverse mortgage is not a good option if you can’t maintain costs associated with the home, like regular monthly expenses, property taxes, and hazard insurance.
Some lending companies offer reverse mortgages in packages with other financial products like life insurance or mortgage insurance. Be wary of these combinations. If you consider one, make sure you read all of the fine print.
Reverse mortgages are a realistic remedy for many seniors in financial distress. If a reverse mortgage isn’t the best financial decision for you, there are other options available.
FAR specialist are available to answer any questions about reverse mortgages and guide you through every step of the process so you can get the best loan to meet your retirement needs and goals.
If you have questions about how a reverse mortgage could ease some of your retirement worries and allow you to stay in your home, contact us today!