If you have a home and are looking to get a lot of money fast, a reverse mortgage might be worth getting. This is where your property is used as security for the loan. To know how to get one in a regret-free way, take these steps.
Establish Just Reasons
You don't want to have second thoughts about a reverse mortgage after the ink has dried and you're approved. Rather, you want to know that this financial option is best for your situation so that you're not locked into something you can't easily get out of. For example, if you would like to access your home's equity in the form of a significant payment and don't want to move out, then a reverse mortgage might be appropriate. Also, consider talking to a financial expert that can help you better weigh the possible pros and cons.
Select a Type
Reverse mortgages have been around for decades, which has led to the creation of several different reverse mortgage types. Some options include proprietary, home equity conversion, and single-purpose reverse mortgages. They're each structured uniquely and in order for you to make the best selection, take your time reviewing them carefully. For instance, if you're trying to get a higher lump sum, you might pursue a proprietary reverse mortgage. Whereas if you have smaller needs that don't need a lot of money, you'll be better off with a single-purpose reverse mortgage since there is less risk involved.
Understand Certain Rules
There are set rules that determine who can qualify for a reverse mortgage. Learning what these are before applying for this type of home equity financing is crucial in making the right decisions moving forward. You must first be the rightful owner of the property and have the intention of living in the home, even after the reverse mortgage goes through. You also can't have any federal debt. If you do, you'll need to pay that off first before trying to get a reverse mortgage. In addition, counseling of some form may also be required so that you know exactly what financial situation you're dealing with before moving forward.
Reverse mortgages are often sought out by homeowners that have a lot of equity and thus want access to this equity without selling their property and moving. If you're in this position, approach a reverse mortgage fully informed so that you know what to expect and perform the right actions. Contact a reverse mortgage company for more information.