I still remember the first bad financial decision I ever made. My seven-year-old buddy told me that if I lent him a few dollars, he would pay me back ten a few weeks later. Unfortunately, he forgot all about his debt, and I was left without my allowance. Although it might seem like a silly example, bad financial decisions like that one plague adults everyday. I have had my fair share, and so I decided to create a blog dedicated to helping you to invest your money properly. Before you take your hard-earned money and throw it at a cause, think about the advice on my website to make a great decision.
If you have equity in your home and are looking to borrow money, a reverse mortgage may be an option worth exploring. Specifically, a reverse mortgage allows you to take out a loan on your home's equity. Many use the funds from a reverse mortgage for anything from paying for a child's college expenses to covering day-to-day expenses. Not sure if a reverse mortgage is right for you? There are a few signs that could indicate a reverse mortgage loan is a good choice.
You Plan on Staying Put
Because you'll be required to pay closing fees and related costs, a reverse mortgage generally only makes sense if you plan on remaining in your home for the foreseeable future. If you have plans to relocate anytime in the next several years, the costs you spend up-front to take out a reverse mortgage might overshadow the benefits you'll reap from borrowing against your home's equity.
There Aren't Any Inheritance Conflicts
Because your loan will be required to be repaid in full when the borrower of a reverse mortgage passes away, it's important that you don't have plans to leave your home to anybody when you pass. This could create a huge conflict, since your home will likely need to be sold off in order to pay the remaining balance on your reverse mortgage.
You (And Your Spouse) Meet the Qualification Requirements
There are a few important qualification requirements both you and your spouse (if applicable) will need to meet in order to take out a reverse mortgage. For starters, you'll both need to be at least 62 years of age. You'll also need to have equity in your home, so if you owe more than the home is currently worth, you won't be eligible for a reserve mortgage.
You Can Afford Ongoing Maintenance
Another important stipulation of taking out a reverse mortgage is keeping your home well maintained and cared for. If you aren't able to afford ongoing maintenance costs associated with maintaining (or improving) your home's resale value, then a reverse mortgage probably isn't the right borrowing option for you at this time.
Overall, a reverse mortgage can be a great option for those who want to borrow against their home equity. Just be sure these scenarios apply to you, and think about consulting with a financial advisor to make sure this is the right choice for you before you sign on the dotted line.
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