You have heard about reverse mortgages, and there may be terms and important details that you are not familiar with. One of the distinct advantages of a reverse mortgage is that you get to keep the deed of your home. As it is under your name, you will still be responsible for the maintenance of your home. And you must make sure that it is well kept and presentable.
Another homeowner's responsibility is the prompt payment of the property taxes and insurance as well. If you cannot prove that you can maintain the upkeep of your home and you can't pay for the taxes and insurances, then the lender can demand the full payment of your loan.
Be aware that there are downsides when you apply for a reverse mortgage. One downside is that if you use your home's equity, and then you pass away, your spouse will lose the home and may need to transfer somewhere else, and your heirs will stand to receive less inheritance as well. But don't worry because there are ways to work around it so that all bases are covered.
So how do you work around the possibility of your spouse being evicted from the home that you both built? Include them as a co-borrower in your reverse mortgage. This way, even if you pass, for as long as your spouse lives in the same house and is a co-borrower, their stay in the house is secured.
When it comes to your heirs, it would be best to prepare them to have other fund sources to keep the home. If they choose to sell it when you pass, they will not pay the full amount of the loan is bigger than the value of the home, and the FHA insurance will cover the remaining balance. They get to keep the surplus if the home has increased in value and more than the remaining mortgage balance.
Another downside of a reverse mortgage is that if you take it too early in your retirement age, you might outlive the proceeds of your mortgage. To combat this, it would be best to take out the loan as later as possible. For more details about this, you can contact us, and we will help you gauge what your best options will be.