For many seniors, the recent economic downturn and the rising cost of living have made living on fixed retirement income or social security benefits particularly difficult. Many also encounter rising out-of-pocket health care costs and other unexpected expenses. If you or your parent are having difficulty making ends meet, or if you would simply like more money to enjoy life in your golden years, a reverse mortgage may be a helpful solution.
Any homeowner age 62 or older is eligible to take out a reverse mortgage, which allows you to take out a loan against the equity in your home. You do not have to sell your home, and you may keep your property title in your name. In contrast to a standard mortgage, you will not have to make monthly payments. Instead, your lender makes payments to you. You have a variety of payment options to choose from, such as monthly payments or a lump sum, and there are no income, credit, or employment prerequisites to be eligible. If you decide that this kind of loan is right for you, you will want to work with someone you can trust. Here are some important questions to ask when searching for reverse mortgage specialists to partner with.
Are They a Broker or a Lender?
A broker can help you do all of the legwork when searching for the best rates and terms, but they will most likely charge a broker fee. If you are looking to keep your costs at a minimum, working directly with a lender is a smart choice.
Do They Have Experience as Reverse Mortgage Specialists?
When the housing bubble burst and the market for standard mortgages dwindled, many traditional brokers jumped into the reverse mortgage market. Therefore, many have very little experience with these types of loans, and they may not be as knowledgeable about your options as a lender with many years of specialized experience would be. Look for a lender with a proven track record.
Are They a Member of NRMLA?
The National Reverse Mortgage Lenders Association requires its members to uphold high ethical standards and adhere to a code of conduct. Choosing a lender who is an active member in good standing of this organization will safeguard your interests and ensure you are working with an ethical company.
Are They Approved to Offer HECM Loans?
HECM loans, or Home Equity Conversion Mortgages, are loans that are insured by the Federal Housing Administration. This means that if your lender goes out of business for some reason, you will continue to receive payments as agreed upon. Reverse mortgage specialists must be approved by the FHA to offer this type of loan.
What Kind of Fees Are Involved?
A reputable lender is able to tell you upfront and in detail what kind of fees and costs are associated with whichever loan option you choose. Ask him or her to explain each cost, and be on alert for any hidden fees.
The proceeds from reverse mortgages can be spent any way you like, and for many seniors, they are a beneficial solution to meeting their financial goals.