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Step 1
Think ahead to the future. Reverse mortgages sound great at first because it's difficult to think about paying back a large sum of money when the date is undetermined. Are you planning on moving in the future? If not, a reverse mortgage could be a great idea. If you are planning on moving, perhaps put off the reverse mortgage until you are in your final home.
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Step 2
Think about your children. If you die, your children have three options. First, they can sell the house, pay the mortgage company and keep whatever is left over. Or they could keep the house, and pay off the reverse mortgage. Finally, they could also simply give the house to the reverse mortgage holder and call it done. None of these options will give your children a large windfall. If leaving your children with plenty of money is important to you, a reverse mortgage may not be the right option.
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Step 3
Decide if you might have a large necessary expense in the future. Retired folks with illnesses are great candidates for a reverse mortgage because it gives them a lot of wiggle room to pay for bills. As long as you live in the house, you don't have to pay the money back.
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Step 4
Consider your age as a main factor. If you are too young, a reverse mortgage isn't smart. You will probably want to move sooner or later, and will be saddled with a large bill. Even individuals in their 50s are too young for a reverse mortgage.
Comments
vikki9 said
on 7/29/2008 Very timely. Thank you.
purrfect1969 said
on 7/29/2008 Great info and great timing, considering the financial situation many people are facing.
amylaine said
on 7/29/2008 great article
Hapworth said
on 7/29/2008 Good information!
Melanierose said
on 7/29/2008 Well written, 5*