La Quinta, California

La Quinta, California
Desert Luxury

Desert Luxury Realty

Thank you for visiting my blog. When you choose Mary Williams, as your real estate agent, you are working with a team of seasoned professionals who cater to your every real estate need. Buying or Selling your home does not need to be full of hassels or needless pressure. Take it easy and enjoy the luxury of the desert. I look forward to assisting you with your search or sell of your home. Contact me today!

Thursday, June 20, 2013

How to Know If a Reverse Mortgage Is Right for You

Desert Luxury Realty

If you’re of a particular age and short on cash, a reverse mortgage can be a godsend. But how do you know if it’s right for you? Before you start to tear your hair out, here are a few items to consider.

 What is a Reverse Mortgage? 

Reverse mortgages, officially called the Home Equity Conversion Mortgage (HECM), are government-sponsored products that help seniors earn a little cash off home equity. To be eligible, you must be over the age of 62.

Seniors most often take out a reverse mortgage to supplement social security income, make home repairs, meet unforeseen medical expenses, or for other “rainy day” events. Typically, taking out a reverse mortgage is only worthwhile if you plan on staying at home for a long time. The biggest advantage a reverse mortgage offers is the ability for seniors to remain at home for as long as possible, without the need of imposing on family members or moving to an assisted living facility.

The full requirements to apply for a reverse loan include:

  • Be 62 years or older
  • Own the home or have a low mortgage balance
  • Live at home
  • The home must be a single-family or 2-4-unit home
When a Reverse Mortgage Is Not a Good Idea

With a reverse mortgage, you receive cash every month out of your home’s equity. When a home is sold or no longer the primary residence, all the money received, interest, and loan fees associated with the reverse mortgage must be paid off. For these reasons, it’s a bad idea to get a reverse mortgage if you’re going to sell the home or move away at some point. It’s also not a good idea to take out a reverse mortgage if you have any heirs, because the debt transfers to them through your estate.

The reverse mortgage works to meet your immediate financial goals and gives you an extra boost. It should supplement your main source of income. You should not consider a reverse mortgage if you currently struggle to pay property taxes or homeowners insurance.

Modify Your Home to Fit Changing Needs

Because of medical advances and emerging services for the elderly, it is often quite conceivable that you can stay in your home as long as you want. You should be committed to staying in your home for at least five years to recoup the costs of the loan, but to get full value from your mortgage you should stay in your home for the remainder of your life.

With a reverse mortgage, there are a couple of options for your cash out. You could get an immediate lump sum, a line of credit, monthly annuity payments, or a combination of all three. With this extra money, you could finance extra help at home, either for homemaking services or daytime home healthcare. Usually, to get the loan, you must have some specific purpose for which you’ll be using the money. You could use it to renovate the bathroom, or add an extra railing for safety. Any type of home repair or renovation is a great use for a reverse mortgage.