At Primary Residential Mortgage in Fort Myers, we know that our clients have various goals for their mortgages and home purchases. On top of maintaining a comfortable residence, some buyers are looking to build equity and credit while others might be looking to capitalize on this.
For those in the latter category, especially many older people who have spent a long time building up their equity, an option called the reverse mortgage might make sense. A reverse mortgage involves an agreement with a mortgage company where they pay you a certain amount each month for a designated period of time (often until either death or moving out of the home), based on the equity you’ve built up in the home.
Our loan officers can help explain several variables of the reverse mortgage to you, and can help you answer an important question: Are you a good candidate for this kind of mortgage? Here are some factors that will play a role here.
A reverse mortgage involves several elements of future planning, including your ability to handle finances even if you happen to lose a spouse or source of income. You have to be realistic about things like income and pensions here – being too cavalier might lock you into a loan situation that isn’t actually beneficial and ends up costing you on the back end.
One reason why income is so important is because you’ll still be responsible for all upkeep, maintenance, taxes and bills for your home after receiving a reverse mortgage. Between the sum you’ll receive from the reverse mortgage and your other income, will you have enough to manage inflation costs (which could nearly double your expenses) and stay above water? If not, you might consider downsizing to a smaller home before a reverse mortgage is taken out.
Maybe the single most important question to ask when you’re considering a reverse mortgage is how much equity you’ve built in the home. A big myth surrounding these mortgages is that the bank or lending institution pays off your mortgage and sends you a check – this is false, and the new lender does hold your existing mortgage.
Instead, the amount you receive each month is based on your equity. If your home is set to be paid off in a couple years, for instance, you might prefer simply doing this and reducing your monthly payments instead of borrowing against it. The longer you wait to take out a reverse mortgage, the more equity you’ll build and the higher the check will be.
Your health is important because it plays a role in how long you can stay in your house. You’re a good candidate for a reverse mortgage if you can afford to live in it and can access important necessities.
For more on reverse mortgages and whether one might be right for you, or to learn about any of our home loan services, speak to the pros at Primary Residential Mortgage in Fort Myers today.
PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Florida Office of Financial Regulation MLD646. Opinions expressed are solely my own and do not express the views of my employer.