Reverse mortgages can help a lot of people, but it would also be unfair to say that they are ideal for every person. There is an ideal candidate for this type of mortgage product. Knowing whether you and your needs fall within this category beforehand is important.
No Plans to Move in the Immediate Future
The ideal candidate for a reverse mortgage is someone without immediate plans to move from their home. The reason this is so important is that moving too soon could cost you money.
When you tap into the property's equity, this can create somewhat of an imbalance between the value of the home and the loan amount, causing the loan balance to be greater than the property value. However, this is only temporary. As you stay in the home and pay on the loan, this balances things out, making a move later down the line more financially feasible.
Able to Comfortably Maintain Your Home
Anyone considering a reverse mortgage should also have the financial means to comfortably maintain their home. This type of new loan only covers one slice of the affordability pie. If you're looking to lower your mortgage, but you're also having concerns with paying utility bills, repair costs, and other important upkeep expenses, you might want to make some changes before taking out this mortgage.
For instance, looking for ways to cut your costs or investing in a home warranty program might help. On the other hand, if you are looking to lower your mortgage, but can easily afford these other expenses, you should be fine.
Not Planning to Leave as Heirloom Property
Those people best suited for a reverse mortgage should also not have any plans on leaving the property as an heirloom. It's important to point out that there is a misconception that you absolutely can't pass down a home with a reverse mortgage.
This is not entirely true, but it can be a rather challenging process for the individual you're passing it to. In most instances, the property needs to be paid off before this can happen, so you want to have an aggressive repayment plan in place beforehand to ensure you're able to pass down the property with ease.
If you are looking for help with your home, a reverse mortgage can help you relieve much of your stress. Take your time, speak with an advisor, and pursue the process when you're ready.