Your home is likely your most valuable asset and unlocking that value can be life-changing. However, rushing into an agreement with a reverse mortgage company can be a mistake. You should always take your time to find a reputable company that cares about whether a reverse mortgage is in your best interest and will walk you through the process.
Choosing a reverse mortgage company is a decision you only make once. Here is what to ask a reverse mortgage company to see if they are the right fit for you.
Who Do They Work For?
A reverse mortgage company that works for the bank is incentivized to sell to you. They represent the bank’s best interests and may fail to do things like show you a bank with a lower interest rate or that would offer you a higher principal limit. That’s why it is so essential to know who the lenders work for–and it should be for you.
What are the Risks of Reverse Mortgages?
Nothing is without risks or downsides, and anyone who would convince you that a reverse mortgage is completely fine for everyone isn’t being honest. While we believe that most people can benefit from these loans, we still believe that we should be honest if we think that you won’t benefit from one.
For example, if you’re planning on selling your home relatively soon, maybe a reverse mortgage isn’t a good option for you. If you don’t qualify for a high principal limit, maybe you should wait until you do. People who are too focused on making a sale today might give you bad advice. But if they openly walk through the risks with you, you can trust their honesty.
Are you interested in learning about the benefits and risks of reverse mortgages? Contact our experts today.
What are the Fees and Closing Costs?
All loans have fees and closing costs, and reverse mortgages are no different. Your reverse mortgage company should be upfront about every single cost, what it will be precisely, and when it will need to be paid. They should also be upfront about your other responsibilities. For example, you will still need to keep home insurance on the property while you have the loan, so you need to set money aside for that. You also need to keep maintaining the home.
What is My Principal Limit?
You won’t be able to access all of the equity in your home. You will instead qualify for a principal limit, or a maximum amount you can borrow against the home. Different loans will offer different principal limits and your lender should help you shop through your options to find the largest limit–if that’s your foremost priority. Reducing interest and fees might be your priority instead.
What Happens When the Loan is Due?
The loan needs to be repaid, typically by the sale of the home. You may end up selling the home yourself to move. Or, your heirs may be responsible for selling the home. Either way, you should know how long you have to repay the loan after the sale.
Talk to Reverse Mortgage 4U about your reverse mortgage options.