The right time to consult with reverse mortgage lenders is when you are at least 62 years old and have no plans of moving out of your current home, among other important factors.
While staying put seems easy, note that you would need to pay the loan in full if you need to move away. Primaryresidentialmortgage.com explains that by knowing the downsides, you can better gauge them against the possible benefits of a reverse mortgage.
How It Benefits You
The total home equity owned by all American homeowners reached more than $908 billion in 2017, which translates to around $15,000 per household, according to CoreLogic. In some states, it even reached an average gain of $44,000.
By tapping into your home’s higher equity, you can increase your retirement fund without having to sell your property. Most retirees have paid off the original mortgage on their houses, so there is a higher possibility of lower monthly payments and interest rates. These will depend on the value of your house.
The Downside of Higher Values
Rising property values are a boon for retirees. If you live in California, some counties have registered up to 60% higher median values between 2010 and 2016. However, this came at the expense of population growth.
In Los Angeles County, for instance, the birth rate fell by almost 2,600 babies among women from 25 to 29 years old. Median home prices in the county have increased by 31% over the six-year period, which indicated that more people are focusing less on having a child than buying a house.
Retirees and other eligible homeowners should consider a reverse mortgage only if they fully understood the risks, as the financial obligations can be overwhelming when you breach certain terms.