Who is best suited for a reverse mortgage?

Ideal Candidates for a Reverse Mortgage A homeowner has no immediate need for money and owes little or nothing for the current home. You have a large mortgage balance and you have many years left before it is paid. Recent reforms have helped correct many flaws that put vulnerable borrowers at risk, but some problems remain. Borrowers who applied for reverse mortgages before the protections were enacted are more susceptible to getting into trouble, while problems with inflated appraisals and confusing marketing continue to affect newer mortgages.

Ideal inverted mortgage borrowers are also those who have accumulated substantial and diversified retirement savings. The three main types of reverse mortgage products are home equity conversion mortgages (HECM), single-purpose reverse mortgages, and reverse mortgages. Which is right for you depends on your financial needs and retirement goals. Reverse mortgages are a great retirement solution for many homeowners.

They allow you to access a portion of your home equity, such as cash payments, a lump sum, or a line of credit. This helps many people finance their retirement when other forms of retirement income might not be sufficient. Because of the costs, reverse mortgages are also best suited for a situation where you plan to stay in your home for the long term. They don't make sense if your home isn't suitable for aging or if you're planning to move in the next three to five years, says Marguerita Cheng, a certified financial planner in Potomac, Maryland.

The patented Equity Elite Reverse Mortgage program is an alternative to traditional HECMs for people over 60 and is intended to have fewer restrictions. Single-purpose reverse mortgages are similar to HECM loans in some ways, but differ in other critical aspects. If you're 62 or older, you may be able to convert your home equity to cash with a reverse mortgage. A reverse mortgage is best for people who have a lot of equity in their home, who have limited income during retirement and who don't want to leave their home to their heirs, or who have heirs who can afford the reverse mortgage when the owner dies.

If a reverse mortgage isn't right for you, there are many other routes you can take to get the financing you need. While these loans may be the easiest to obtain and the quickest to finance, they have also been known to attract unscrupulous professionals who use reverse mortgages as an opportunity to scam unsuspecting older people out of their property capital. When a homeowner purchases a HECM loan from a reverse mortgage lender such as GoodLife, that capital is made available to them in the form of monthly payments, a lump sum of cash, or a line of credit. The initial costs associated with a reverse mortgage include fees, service charges and the initial mortgage insurance premium.

This process and the company's authorized specialists make it an easy option for those just starting out in the concept of reverse mortgages. Keep in mind that the actual cost of your reverse mortgage is a combination of upfront fees and ongoing costs. Reverse mortgages, a financial tool that allows older people to take advantage of the home's net worth and current age, can free up cash during retirement and, in some cases, eliminate the monthly mortgage payment. Anyone who wants to donate their home to their heirs or to charities for free and without paying should apply for a reverse mortgage.

If you're not sure if a single-use reverse mortgage is right for your financial situation, you can always talk to a GoodLife reverse mortgage specialist, who will explain your options. If you're more interested in making regular payments to supplement your monthly income, you may prefer a variable rate reverse mortgage. Once you close a reverse mortgage, you have certain obligations to maintain the property and avoid default. Often, the victim already knows the author of reverse mortgage scams, but some lenders also deliberately mislead potential borrowers, according to the National Association of Reverse Mortgage Lenders (NRMLA).

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Harry Lammel
Harry Lammel

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