Need a reverse mortgage? Here are things to know before getting one

What is life after retirement for many would-be retirees? To some, it is an opportunity to live the life they have always dreamed of - time to have that long-awaited vacation in an exotic tourist destination, take on a personal-development career, enjoy more time with their grandchildren, or live the dream life. To others, it is a period to re-evaluate their expenses and acquisitions during their career years.

Such self-awakening can come as a surprise and challenge to many new retirees. In a bid to cut back on liabilities, many of them mortgage their homes. However, be aware that such a move should come with the utmost caution, as it may result in being stuck in a long-term debt trap - a nightmarish situation retirees dread.

Who Is Eligible for A Reverse Mortgage?

If you are of the age 62 years and above, then you qualify for a reverse home loan, provided that you meet the loan requirements. For a start, you must have a legitimate, permanent place of residence - which means your home. Rented apartments do not apply in this case. This condition makes your loan application legal and authentic.

What Are the Borrowing Limits?

“Is there a minimum and maximum limit to the loan amount I can take?” you may ask. Here is what you should know about reverse loan limits. There are several factors a lender will consider before approving this type of loan, one of which includes evaluating an individual’s financial status using a reverse loan application calculator.

Other factors may consist of the outstanding mortgage (debt), condition, age, and position. But does this debt influence the approval of a reverse mortgage? Certainly not!

Take professional advice so that should you make a significant preliminary payment of the existing mortgage for your reverse mortgage loan funds to be accessible; with that, you have the remaining balance that will cater to your needs.

How Can I Receive My Reverse Mortgage Funds?

In this section, you will see ways to set up your reverse mortgage loan funding. To begin with, you can receive your payouts in a lump sum, at once. There may be several financial goals to meet that would require lots of money. Hence, receiving this type of payment would seem ideal.

Another way around it is to create a line of credit that you can access anytime. But, if that is not your call, then you can arrange a monthly payment plan with the lender - an option most retirees take. With this setup, you have access to funds every month.

With the monthly payment option, you will have an idea of the amount to receive. Consequently, it becomes easy to plan monthly goals and tasks. Your lender would be in the best position to provide the ideal option based on your financial state.

What Else Should I Know?

As mentioned above you need to have a permanent residence to be eligible for a reverse mortgage. But what happens when you spend most times away from home? Do you still qualify for this loan option?

In actuality, even if you have a permanent home, staying away for very long periods can affect your loan approval, including living outside the country for several months each year.

That is not to state that you can not take holidays or vacations. However, they should be short. What is most important is that you commence your plans towards taking a reverse mortgage. That means more money in your wallet. Think of all the things you could achieve with such funds.

Disclosure: This is a collaborative post.