According to recent information published by Inman News, one out of every three American homeowners own their homes outright. Many more seniors have a great deal of equity in their homes. Still, even with all of this equity, some seniors struggle to get by on their retirement savings and Social Security benefits. One way to maximize a limited income is to utilize your equity with a reverse mortgage. However, before doing so, Inman News wants seniors to know three important pieces of reverse mortgage information.
The first piece of reverse mortgage information that potential borrowers should know is that finding a reputable lender is one of the most important steps in the loan process. A great lender will take the time to answer questions, help borrowers find the most suitable loan product and will never pressure borrowers into choosing a product they do not understand or feel comfortable with.
In addition to choosing a reputable lender, seniors should also think carefully before choosing the lump sum disbursement option. Currently, around 70% of borrowers choose this disbursement option to repay an existing mortgage loan or afford another large expense. While this option does benefit borrowers who still owe money on a forward mortgage, seniors who own their homes outright sometimes benefit more from monthly payments or a line of credit.
The last piece of important reverse mortgage information is that seniors should be careful not to leave one spouse off the reverse mortgage. If one spouse is too young to qualify for the loan or an individual borrower gets remarried, the non-borrowing spouse can be forced to repay the loan should the borrowing spouse pass away. To avoid future problems, Inman advises seniors to keep both spouses on the loan even if it means waiting until the youngest borrower turns 62.