How to Determine if you are a Good Reverse Mortgage Candidate
........................................................................................................................................................................................................................
The most important thing you can do if you are interested in the concept of a reverse mortgage is to figure out whether or not that type of reverse mortgage is right for your particular situation. While reverse mortgages are a very nice product that delivers a very useful service to people, they are certainly not for everyone. There are implications that you need to think about that transcend just the basic requirements for reverse mortgages and if you are interested in doing business with reverse mortgage lenders, it behoves you to at least understand the basics of what these are before you commit to doing anything.

If you are not already aware, there is an age restriction to reverse mortgages. Reverse mortgage loans are not given out to people unless they are at least 62 years of age. So, the first thing you need to have is that age restriction requirement dealt with. If you don’t, then no reverse mortgage lenders are going to deal with you.

However, that is a relatively obvious thing that most people have probably already figured out. Rather than talking about guideline suitability for a reverse mortgage, it is perhaps more important to discuss suitability in terms of what it will do to your life. The reverse mortgage loan is tied to your home’s equity, so the only time you will be paying it back is either after you’ve passed away, or alternatively, if you sell your home and move somewhere else. In both cases, the money to pay the reverse mortgage is going to come from the selling of the home (i.e. liquidation).

So, the thing you really need to consider is whether or not your heirs will be affected by not being able to inherit your primary residential property. This is really the major downside to the reverse mortgage concept; unless your heirs agree to pay back the loan instead and keep the house as a result, they are not going to be able to inherit your property. For many people, this isn’t really that big a deal simply because their children are already off living their own incomes and really wouldn’t be negatively affected by not getting to inherit property. However, for some people, it might indeed end up being a big deal and therefore you need to consider carefully which of those two camps you are in.

Another thing you need to consider is the interest factor. Like every other type of loan, there is interest attached to a reverse mortgage. The principal of the loan plus the interest need to be paid back and because the payment comes directly from liquidation of your property, the amount that you can borrow is limited both by the effective interest rate and by the equity that is available in your home. Therefore, looking at the mathematics and how they pan out in regards to the specific mortgage you are interested in is a good idea before committing to any agreement; signed, verbal or otherwise.

Learn more about Reverse Mortgages >>