Questions to Ask Yourself Before Getting a Reverse Mortgage
Preparing for a Reverse Mortgage
Deciding whether a reverse mortgage is right for you is more than a financial decision about a particular product; it is also both an emotional and an important family decision. The costs of a reverse mortgage probably only make sense if you will remain in your home for more than a few years. It is also not a product to rush into – the process of selecting a lender, going through the HUD counseling process and then closing the loan can take some time. Here are some of the questions you should ask yourself and discuss with your family:
Is ‘Aging in Place’ Right For You?
- Is the property a suitable place for you as you age? For example:
- Will you be able to manage stairs and other features of your home? Can you afford to modify your home if not?
- As your home ages with you, will you be able to maintain and repair it?
- If you can no longer drive, will you become too isolated where you live today?
- Will you need more care as you age?
- If your health forces you to leave your house for a year or more, you will probably need to repay your reverse mortgage early.
- If you need in-home help in the future, is there room for both you and the helper(s)
Are Your Legal Affairs in Order?
- Who owns your home? If your children or grandchildren are already on the title of your home, it may not be possible to obtain a reverse mortgage.
- Do you have a durable power of attorney that includes real estate? This will allow your family or someone you trust to make decisions if you are unable to do so.
How Much Money do You Need and When?
- Think through both your day to day expenses and predictable future major expenses such as home repair or healthcare-related costs. If you use a lot of your home equity up now, are you covered for future needs too?
- Have you explored your alternatives? Many states, counties and cities offer loans to help you stay at home for specific purposes such as home repair, home improvement, or property tax deferral.
- Are you taking full advantage of programs like Medicaid, Medicare and the service of your local agencies? They can often provide access to a variety of services at low rates to help you live at home.
Do You Understand How Reverse Mortgage Works?
- You shouldn’t sign any documents you don’t fully understand. Using this guide and other resources, such as those available from AARP and HUD, make sure that you know what you’re getting into. Take full advantage of the counseling you will receive during the application process. Get help from a trusted friend or family member.
- Talk to your family and be sure they understand what you are doing – your heirs will be responsible for paying off the loan balance if they want to keep your house in the family.