Reverse mortgages can be a useful tool for seniors who need extra income. But for someone who doesn’t plan to live in her home for long, a reverse mortgage could be mistake. Here’s why according to a recent US News and World Report article about reverse mortgages.
Cashing Out Your Home Equity
The big appeal of reverse home loans is that they allow you to convert home equity into cash. That’s a huge benefit in today’s turbulent economy because so many folks have taken significant hits to their retirement accounts and lost jobs. Money from a reverse mortgage can be the thing that helps you get through tough times and avoid losing your home.
Will You Leave Your Home Soon?
Take some time to investigate whether a reverse mortgage will be a help or hindrance. If you plan to use an HECM reverse mortgage to downsize, this could be a smart move. But some cases where a reverse mortgage may not be a good idea include:
• If you plan to move to an assisted living facility or nursing home
• If you plan to sell your home and move in with other family members
• If you think you won’t be able to keep up maintenance on your home
• If you don’t live in the house long enough to recoup the fees paid for the loan
Paying Off Your Mortgage Loan
Once you leave your home, the mortgage lender requires that the reverse mortgage be repaid. If you’ve spent most of the money you received from a reverse home loan you’ll have to come up with the cash or sell your home. Compare reverse mortgages to decide if getting one fits into your future financial plans.