Dwindling savings and living on social security benefits can put you in a financial bind. Getting a reverse mortgage loan can help you out of your current money troubles, but it comes with certain conditions. If you don’t want to lose your home to a foreclosure, then ask yourself the following questions.
Do you need it?
Reverse mortgage loans work by allowing you to convert a portion of your home equity into cash. But these loans can be pretty expensive. What are you going to spend the funds on? Considering the fees and risks, it’s only wise to make sure that whatever it is, it will be something you urgently need. That should make every penny of the money you get of these loans count.
Can you afford it?
This loan can come with a pretty hefty price tag. The amount you owe grows larger every month. Also, there are other expenses tied to the conditions of the loan. For instance, you’ll need to be current on your property taxes. You can’t default on your home insurance premiums. And your homeowner’s dues have to be covered. Failure to pay for any of these can cause you to lose your home. So, before you take this step, you need to be confident about your ability to keep up with the payments.
Do you have any other options?
If you use up your home equity now, you might not have enough funds you for emergencies a few years from now. Say your home has to have repairs done, or you get into an accident. That means a ton of costs. In this case, your options would be sorely limited. So if you don’t have a financial emergency on your hands, better to keep this card in reserve for when you will really need it in the future.