A reverse mortgage is a loan for homeowners aged 62 and older who want to borrow against their home equity without having to make monthly payments. This mortgage product can help seni🍬ors who are short on funds for living expenses. It can also benefit those who want to diversify their sourc🍎es of retirement income and hedge against risks such as market downturns and outliving savings.

Taking out a reverse mortgage also means spending a significant part of your 澳洲幸运5官方开奖结果体彩网:home equity on loan fees and interest. In addition, the loan terms can put the homeowner, spouse, and heirs 澳洲幸运5官方开奖结果体彩网:at ri🌠sk of losing money an🐎d a place to live.

Here are four situations where a reverse mortg🧔age might be a good choice and four where it might not be.

When a Reverse Mortgage Makes Sense

A reverse mortgage can be 澳洲幸运5官方开奖结果体彩网:a valuable problem-s𓆏olving tool for seniors who understand how these loans w🐻ork and have a plan for how they'll use their equity. Here are four situations where this loan might be a good idea.

You don't plan to move soon

You should plan on remaining in your home for the near future if you're considering a reverse mortgage. This rule of thumb isn't unique to reverse mortgages; it also usually doesn't make sense to get a new forward mortgage (like a refinance loan) on a home you're about to sell. Th𝓡e reason? Loan closing costs.

It may not make financial sense to pay these sums if you're going to move before the loan's financial benefits outweigh the costs. Moving is one of the events that make your reverse mortgage due and payable. After paying seller fees and repaying your HECM, the proceeds from selling your house may not be enough to support your next step, whether it's downsizing, assisted living, or paying a relative for caregiving.

Your spouse is 62 or older

Any borrower on a reverse mortgage 澳洲幸运5官方开奖结果体彩网:must be at least 62 years old. If you’re married and your spouse isn’t yet 62, getting a reverse mortgage is not ideal. Though new laws may protect your non-borrowing sp🍰ouse from losing the home if you die first, non-borrowers can't get money from the loan after the borrower dies. That means no more credit draws or monthly payments and the surviving spouse might lose an important source of income.

If you and your spouse are each 62 or older and named as owners on your home's title, getting a reverse mortgage together might be a good choice.

You can meet the financial and physical📖 requirements of home ownership𒁏

Keeping up with your property taxes, 澳洲幸运5官方开奖结果体彩网:homeowners insurance, and home maintenance is essential if you have a rever🔯se mortgage. If you fall behind, the lender can declare your loan due and payable.

If you don’t pay your property taxes, the county tax authorities can place a lien on your home, take possession of it, and sell it to recoup the taxes owed. The tax authority’s claim to your property supersedes the lender’s. So, if you don’t pay your property taxes, you’re putting the lender’s 澳洲幸运5官方开奖结果体彩网:collateral (your 💟house) at risk. That's why lenders require borrowers to 𝄹stay current on taxes.

Not paying your homeowner's insurance premiums also puts the lender’s collateral at risk. If your house burns down, there’s no insurance to pay the costs of rebuilding. Your lender doesn’t want to get stuck with a burned-out shell of a home that isn’t worth nearly what you owe.

Deferring home maintenance causes your home to lose value. If you don’t replace a failing roof, for example, your home could end up with extensive water damage after it rains or snows.

Your home is just an asset

Some homes have sentimental value. If your home has been in the family for decades or generations, your 𓄧children might hope to keep it that way.

While there are ways for heirs to pay off a reverse mortg✃age and keep the house, the loan does complicate things. If your home is just an asset, though, then leveraging it for a more comfortable retirement might be the best way to use it.

When a Reverse Mortgage Doesn't Make Sense

We've already touched on some scenarios when a reverse mortgage may be the wrong choice: you're not sure how long you'll keep living in the home, your spouse can't be a co-borrower, you'd struggle to maintain the home, or the home has sentimental value to your loved ones. Let's further discuss some scenarios where a reverse mortgage might not suit your circumstances.

You don't have enough equity

To qualify for a reverse mortgage, you must either own your home outright or have roughly 50% equity, at least. The percentage isn't set by law, because exactly 澳洲幸运5官方开奖结果体彩网:how much equity you need to qualify is tied to the other factors that affect how much you can borrow: your age, the payment plan you want, and 澳洲幸运5官方开奖结果体彩网:interest rates.

You need to have enough equity so that a reverse mortgage will leave you with a reasonable lump sum, monthly payment, or 澳洲幸运5官方开奖结果体彩网:line of credit after paying off your existing mortgage balance (provided you still have one).

Getting quotes from at lea⛄st three lenders and going through reverse mortgage counseling will tell you whether you have enough equity and how much you could borrow with each reverse mortgage payment option. If none provide the cash yoไu need, an alternative might help you more.

For example, 澳洲幸运5官方开奖结果体彩网:selling your home would allow you to cash out all of your equity, rather than just a percentage of it (as is the case with a reverse mortgage). Buying a less expensive home, renting, or moving in with a family member might be a better solution.

Someone lives with you

If you have friends, relatives, or roommates 澳洲幸运5官方开奖结果体彩网:living with you and 🅠they're not co-borrowers on your reverse mortgage, they'll need to be prepared to move out if you die before them. Your co-residents may also have to vacate the home if you move out for more than a year. (There are exceptions for eligible non-borrowing spouses.) Lenders also have strict policies about 澳洲幸运5官方开奖结果体彩网:renting a portion of your property to use for businesses, such as Airbnb.

Moving into a nursing home or an assisted living facility for more than 12 consecutive months is considered a permanent move under reverse mortgage regulations. Seniors often make unplanned moves for medical reasons, and household members should be aware of this possibility.

Reverse mortgages require borrowers to live in the home as 澳洲幸运5官方开奖结果体彩网:their primary residence. In fact, borrowers have to certify in writing each year that they still live in the home they're borrowing against in order to avoid 澳洲幸运5官方开奖结果体彩网:foreclosure.

If someone relies on you for housing (and you're okay with continuing that arrangement), you may want to forego the reverse mortgage and leave your home to them in your will or trust. Adding someone to your home's title will not protect them from reverse mortgage foreclosure (and may create new problems, too).

Your home has sentimental value

When the last reverse mortgage borrower dies, the loan becomes due and payable. Heirs who want to keep the house have the opportunity to pay the reverse mortgage balance to the lender. They'll need cash or another mortgage to pay off the loan.

If your heirs can't or won’t repay the loan, the lender will sell the home to recoup what the borrower owed. Any positive balance between the sale proceeds and the loan balance goes to the borrower's estate. If there’s a negative balance, 澳洲幸运5官🌸方开奖结果体彩网:Federal H🦄ousing Administration (FHA) insurance covers it. The heirs receive nothing, but they don't owe anything, either.

You have health challenges

Retirement-age homeowners with health issues might consider a reverse mortgage to raise cash for medical bills. However, if your health declines to the point where you must relocate, the loan must be repaid in full because the home no longer qualifies as the borrower's primary residence. If you might have to move due to health or disability, a reverse mortgage is probably unwise because, in the short run, its upfront costs are unlikely to pay off.

Homeowners who suddenly vacate or sell the property generally have just six months to repay the loan. And though borrowers may pocket any sales proceeds above the balance owed on the loan, thousands of dollars in reverse mortgage costs will have already been paid out.

The Bottom Line

No matter what your situation is now, consider how it might change in the future. Will a reverse mortgage help you or harm you under these different sce💞narios?

Reverse mortgages 澳洲🐼幸运5官方开奖结果体彩网:aren't an ideal financial chꦑoice for everyone and you may have other options, such as selling your home and downsizing. Older homeowners may also consider renting, which alleviates homeownership headaches like property taxes and repairs. Other possibilities include forward mortgages such as home equity loans, 澳洲幸运5官方开奖结果体彩网:home⛄ equity lines of credit (HE🃏LOCs), or 澳洲幸运5官方开奖结果体彩网:cash-out refinancing, though alꦗl of these require good credit and enough income or asset𝐆s to support monthly payments.

Reverse mortgages, particularly the line of credit payment plan, can also be helpful in many situations. They can provide a source of emergency funds or income diversification, 澳洲幸运5官方开奖结果体彩网:help pay for in-home care, and are a source of 澳洲幸运5官方开奖结果体彩网:nontaxable income (because the money is a loan), so they🅰 won't i✅ncrease your income tax rate or Medicare premiums.

Even if a reverse mortgage is an expensive option and not an ideal one, it may still be the best choice for your circumstances. Here are the ifs: If the proceeds from the loan will increase your long-term financial stability, if you plan to stay in your home for many years, if you can afford the ongoing costs of homeownership, if you have a spouse who is 62 or older and if you don’t plan to leave your home to anyone.