What Questions Should I Ask Before Filing a Reverse Mortgage Application?
Reverse mortgages are definitely tempting, particularly when you are struggling to meet your medical bills, prescription drug costs, utility payments, credit card debts and mortgage repayments, and so on. If you are over 62 years, have a decent home with a large equity, and have no plans of moving out or selling your home, you are eligible for a reverse mortgage. Despite having all the basic eligibility criteria, applying for a reverse mortgage may not turn out to be the best option for you. An unplanned and hasty reverse mortgage may become more of a liability than a profit for you.
Therefore, it is essential that you sit with your counselor for some time to discuss all the issues before applying for a reverse mortgage. This counseling session is otherwise a consumer protection requirement imposed by FHA.
You can ask the following questions to yourself, an existing client, or the mortgage counselor in order to secure a good reverse mortgage loan:
- Do I have plans to move out of my present home? If ‘yes’, is it within 5 years? Do I intend to sell my home within next 5 years?
- How much equity has developed against my home? What amount of payments can I expect from lenders based on my home equity?
- Is the reverse mortgage insured by FHA or is it a proprietary loan product such as Jumbo?
- If I want to transfer inheritance, what will my heirs get from my home under a reverse mortgage?
- What will be remaining for me in _____ (time/year) and ______ (time/year) if I take _____(amount of cash) in _____(time/year) and _____(amount of cash) in _____(time/year).
- Given the realities of my case, what payment options are best for me? Immediate cash withdrawal, annual/monthly withdrawal or line of credit?
- Can you explain about the total loan costs with the help of a chart/graph?
- If I sell my home with_________(amount of cash) in _____(time/year), how different will my loan situation be?
- If I move out in ___________ (time/year) what will be my gains/debts?
- What other terms and conditions should I be aware of? What could be the hidden conditions? Are there any strings attached to any of the offers?
- What are my fees, closing costs and other incidental expenses?
When you consult an existing client of reverse mortgage, you’ll get many other questions to be asked. Answers to all these questions will help you decide when and what type of reverse mortgage to opt for. Answers to these questions may also help you understand if a reverse mortgage is at all a viable option for you.
