Questions to ask before moving forward with a reverse mortgage. A reverse mortgage is a loan that allows homeowners 62 or older to use a portion of their home’s equity to obtain cash proceeds. There are various ways to use the cash proceeds. Repaying the loan doesn’t happen until a “maturity event”. These events include when the last borrower dies, the last eligible non-borrowing spouse dies or leaves home, or the homeowners sell the house or don’t keep up with their loan obligations, like paying property taxes, insurance, and keeping the house in good shape.
Almost all reverse mortgage loans on the market today are federally insured Home Equity Conversion Mortgages (HECMs). However, some states and private lenders offer other types of reverse mortgage loans. These questions are based on the components and requirements of HECM reverse mortgages, but they may be helpful to consumers looking into other types of reverse mortgage loans.
Reverse mortgages are a flexible financial tool. A tool that almost a million homeowners have utilized to help them age in place, among other things. However, thoroughly evaluating reverse mortgages, like any financial product, is critical before determining whether to secure one.
Over the next seven weeks, we will explore the questions to ask before moving forward.