The 8 most important factors to consider before taking out a reverse mortgage

A reverse mortgage can be an excellent retirement savings tool for many homeowners aged 62 and over. It allows you to borrow cash against the equity you may have built up on your home. Aside from supplementing your income, you can stay in your home for as long as you like. However, there are many things you need to consider before taking out a reverse mortgage.

The amount you receive

The amount you can get as a reverse mortgage depends on the type of equity you have built up for your home. If possible, you can get a home appraisal to find out how much credit you’re entitled to. Check if the quantity meets your needs and then make your decision. The good thing, however, is that you still have ownership of your home as long as you stay in it. Nonetheless, you still have to regularly pay your property taxes, home insurance, and other home maintenance costs.

payment options

When it comes to receiving reverse mortgage funds, you have several options to choose from. You can get it as a lump sum, as a monthly payment, or as a line of credit. You can also try a combination of these. Consider your personal situation before choosing the right option. If you have large one-time expenses to cover, you should opt for a flat rate. However, if you need the money for your regular living expenses, you must opt ​​for the monthly payment option. If you only need the money for emergencies or additional expenses, you can consider a credit line.


HUD changes reverse mortgage rules from time to time. They must not affect existing borrowers. But as a senior homeowner thinking about taking out a reverse mortgage, you may need to be aware of all of these rules and regulations. Recently, HECM borrowers are now required to pay an initial mortgage insurance premium of 2% of their maximum loan amount, instead of paying 0.5% previously. This is independent of how much you withdraw in advance. However, the 1.25% annual MIP on the outstanding mortgage balance has now been reduced to 0.5% for all borrowers. Borrowing limits have also been lowered compared to before.


There are many initial costs associated with reverse mortgages such as: B. Loan origination fee, appraisal fee, mortgage insurance premium and closing costs. They can account for up to 3 to 4% of the loan amount and are usually financed into the loan. Apart from that, the lender may also charge some loan administration fees. Many reverse mortgage lenders can get in touch with you about reverse mortgage leads. Check with all of them about the fees involved before signing with any of them.

repayment schedule

Unlike the traditional mortgage, reverse mortgages do not require monthly payments to be made. They only become repayable after your death or move away from your primary residence. This is not an option to consider if you are considering moving away from home in five years. If you do this, you won’t be able to recoup the closing costs you pay for the reverse mortgage you borrowed.

opinion of the family

Talk to your family members before taking out a reverse mortgage. Your heirs may want to keep your home after you die. In most cases, when taking out a reverse mortgage, borrowers use up all of the equity. And once the borrower dies, the home must be sold to pay off the loan. If the family members want to keep the house, they have to look for alternative financing options to pay off the mortgage. Find out what your family members want to do with your home before you take out your mortgage.


How you use the reverse mortgage determines whether you would benefit from taking out one. There are no restrictions on how you use your mortgage amount. You can use it to cover your ongoing living expenses, take a family trip, or cover your kitchen renovation costs. However, you still need a plan before you get the money. Your age also plays a role in using the funds from such a mortgage. For example, if you’re still in your early 60s, you might want to avoid spending unnecessarily so you don’t run out of money down the road.

Alternate options

It benefits you when your financial resources are tight and your family members have no interest in keeping or inheriting your home. However, if you try to see the bigger picture, you might find many other options. Check if you have other income or assets to sell. You can sell your home to your kids, sell your home, refinance your existing mortgage, or even decide to downsize and live in a retirement community.

The reverse mortgage is available to all homeowners over the age of 62. However, it may not suit everyone’s needs. You need to find out if this is the right option for you before you decide to take out a loan. Make sure you understand the fees, laws, and have a concrete plan for usage and repayment. Also, look out for alternative options that may better suit your needs than a reverse mortgage.

This mortgage is a lifetime decision that can help you live your retirement life peacefully and comfortably. Still, you might want to make sure you’ve made the right decision before you answer “yes” to any of the mortgage lenders who come to you through Mortgage Live Leads.