*This is a collaborative guest post*
Financial struggles should be the last thing on your mind when you retire. Unfortunately, that is rarely the case. Financial difficulty in retirement is quite common. If you have heard about reverse mortgages previously, you may be wondering if one can help you avoid having to focus so much on your financial status when you retire. Here are some reverse mortgage questions addressed.
How Does a Reverse Mortgage Vary from a Traditional One?
A traditional mortgage is similar to a reverse mortgage in basic ways. They are both home mortgages, which are based on home values. They also both provide you with money. There, most of the similarities end. That is because you have much longer to repay a reverse mortgage than you do a traditional one. You can spend reverse loan funds with no worry over an extra mortgage bill that way. All you have to do is keep meeting the requirements of the loan and keep living in your home. If you do, the agreement can last indefinitely.
Do You Need Outside Assistance When Deciding on a Reverse Mortgage?
A reverse mortgage lets you take the value of your home and turn it into cash there is no need to repay for years. What more do you need to know to make your choice? The answer is a lot, so you do need to take the time to read about them before making the choice. Make sure you fully understand exactly what you are reading. If you do not, seek out a reverse mortgage counsellor to assist you. He or she can field any of your questions and provide comprehensive answers.
How Do You Pick Where to Get a Reverse Mortgage?
One of the many things you may need unbiased advice on is where to get a reverse mortgage. The first choice is to select a reverse mortgage lender or a jumbo reverse mortgage lender. The jumbo version is simply a larger loan for a property with a higher value. The second choice is to pick between government-issued loans or loans offered from other sources. For example, your local bank does not offer the same government-insured reverse mortgage a government agency would. However, it might offer other advantages like knowledge of and trust in the company and its employees.
When Must You Repay a Reverse Mortgage?
Whether you get a home equity conversion mortgage (HECM) from the government or a private reverse mortgage, you do have to repay it at some point. That point is largely determined by how many years you choose to keep living in your home and how well you maintain it. Until you move or take a certain action, such as filing as bankrupt, the agreement allows free spending. However, once the agreement is violated, which might not be for many years, you may suddenly find yourself with little time to repay what you owe with interest.
What Happens to Your Assets in Case of Failure to Repay?
If you cannot repay a reverse mortgage, all is not lost. One of the best features of such an agreement is only the structure is at risk of sale. Your other assets are not part of the loan agreement. Therefore, you get to keep them, regardless of the outcome of the home sale compared to the loan balance.
What Else Should You Ponder When Weighing You Mortgage Options?
There is a long list of points to ponder about reverse mortgages. You have to think about your current financial status and future moving plans, if any. It is also necessary to consider the other obligations tied to your reverse mortgage agreement. Think about the interest you eventually owe, the maintenance you must keep doing as the homeowner, and whether the overall agreement is worth it to you. If so, you can revel in your retirement with the cash in hand you need.