A question I often get from potential customers is whether they should wait to take a reverse mortgage or do it now. The reverse mortgage is similar to social security in that the older you are the more money you qualify for. The timing of a reverse mortgage is important and there are many things to consider when choosing whether to get it now or to wait a few years.
Reverse Mortgage Qualification
The first thing to consider is how much you qualify for. If you don't qualify now then the choice is easy, but if you do then there are some other things to consider. The first thing is what are you going to do with they money? If you just want to get rid of your mortgage payment then now is as good a time as any. If you need the money for health or other bills, then sooner is better too. If you just want to go on a trip, or buy things you don't really need then you should reconsider getting a reverse mortgage now. The reverse mortgage was set up to supplement your retirement and the money should be used for that. If you go and blow it then what will you do if you need it in the future. Yes you will be able to live in a house payment free, but if you can't afford your taxes and insurance you can be foreclosed on!
The other part of qualifying you need to think about is the real estate market. Many people think that the market is starting to turn around and values may go up. If the area you live in is prime for an increase in value, then waiting may be a good option, especially if you don't need the money now. On the other hand, there are still a lot of areas that are not increasing in value. In these places you should look into the reverse mortgage now because if values go down, it may make it so you don't qualify for as much or at all!
Interest rates also come into play. Currently rates are at historic lows, so it is a great time to qualify for more money with the lowest interest rate. If you have been holding out for lower rates, now is probably your time to move forward.
Age and Future Plans
When applying for a reverse mortgage the older you are the more you qualify for. If you don't need the money now and do not see the house values in your neighborhood dropping in the future, then waiting may be the best way to go. If you are planning on moving to a new house in the next year or two, then you should wait too. There is no since paying closing costs to do a reverse mortgage just to sell your home and move in the near future...just wait and do the reverse on your new house. Another age related issue that comes up is your spouse. If you are considering a reverse mortgage and your spouse is not old enough, you should in most cases wait so you can both be on the loan. If you cannot wait, you can still get a reverse mortgage, but there are some risks that need to be considered.
That Darn Government
One misconception about the reverse mortgage is the government can end up owning your home. I hope if you are a reader of this blog or have spent much time on our reverse mortgage website you would know that is not the case. What is the case is that the government or more appropriately the FHA insures most reverse mortgages so the lender is not at as great of a risk. But with about anything the government does they can change their mind. Budgets get cut, leaders come and go, and things change. Over the past 3 years, the government has decreased the amount of money it will allow people to qualify for two different times and increased the mortgage insurance amount once. All this did was make it harder for people to qualify for the reverse mortgage and then make those who did qualify not get as much money.
Getting a reverse mortgage can be a big decision and the timing gives you one more thing to think about. The bottom line is if you do not have an immediate need you need weigh all your options carefully before proceeding. Our office has specialists who will give you all the details up front so you can have the info to make an informed choice. Call 1-800-431-9250 to schedule a no obligation consultation today.