UNDERSTANDING Reverse mortgages
Reverse Mortgages are a relatively new concept when it comes to homeownership.
The practice has only been around for the better part of the last half century. Like many approaches, it has its upsides and otherwise. Their effectiveness depends on your current set of circumstances.
For most senior citizens, a reverse mortgage may be the perfect option. But, these can be tricky waters to navigate. That’s why LeapFrog Mortgage has put together this guide for your review. Our goal is to keep you informed, regardless of where you are on your homeowner’s journey. Read on for a full breakdown of pros and cons.
A Helping Hand from Your Mortgage
A reverse mortgage can come in handy if you meet the necessary requirements. First, you must at least be sixty-two years of age. If you have equity in your property, that’s great. Having equity can provide some much needed support in the event of the unexpected.
This includes home repairs, hospital bills, and your everyday costs. Another upside to this option is that your property stays secure, even in the event of a tragedy. Loved ones have a grace period to resolve the balance. It can happen either out of pocket, or by putting the home on the market (and pocketing the difference).
Maintenance is Vital When it Comes Your Home
One of the key considerations when it comes to your home is its maintenance. This is the case regardless of the circumstance. Your home’s upkeep is integral when it comes to valuation, among other instances.
Obtaining and sustaining a reverse mortgage is no different. Also, you’ll want to stay current on any associated tax and insurance costs. Delinquency here can lead to losing your home. You might be able to work out a resolution before it reaches this point, but it’s best to avoid it altogether. Keep in mind that you shouldn’t be held responsible for any tariffs on gains made from your choosing this plan.
The Different Types of Reverse Mortgages
So you’ve weighed your options, and decided this is the way to go. Great! Your next step is to decide which kind you want to apply for.
Single-purpose reverse mortgages are a great option if you fall within a lower income range. These are less common than their counterparts, and cannot stray from their declared intended use.
Proprietary Reverse Mortgages are a bit less restrictive. You can use the converted funds for a purpose of your choosing. You will, however, want to have an equity to balance ratio that falls in favor of your equity.
Last, there’s Home Equity Conversion Mortgages. These also rely heavily on equity and are less restrictive. Make no mistake, this option comes with a ton of considerations. They include increased onset rates and stricter guidelines.