Reverse mortgages can be scary. With the right company, though, you’ll have the assistance you need to make the best decisions for yourself. The following points will help when you shopping around for a lender.
Closing costs
Consider the costs when you take out this type of mortgage. Ask the reverse mortgage company for a list of all the upfront costs you’ll have to pay. Closing costs can be a pretty hefty addition and take a chunk out of the proceeds from the loan.
Loan balance
This will get bigger over time. You’re not going to make monthly payments, so your principal balance stays the same. However, the interest rate will be stacked on top of your outstanding balance every month. If you do the math, that means your balance will grow.
Interest rates
There are different interest rates and you can choose between fixed or variable interest rates. With plenty of choices around, make sure to scout for the best one. That doesn’t automatically mean opting for the lowest interest rate possible, because that can come with its own set of troubles. Go for a reputable reverse mortgage company, one with a fairly reasonable interest rate.
Home value
You can only borrow money that’s equal to the value of your home. Worried you might leave behind debts for your heirs? Don’t be. The loan ensures you can only borrow money against your equity. That way, you won’t have to stress out thinking you’re leaving behind financial burdens for your family and loved ones.
Interest fees
There are reverse mortgage interest fees since the IRS says it’s a loan, not an income stream. So be informed. Make sure you consider all these when you look for a lending company.
