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Reverse mortgage lenders offer retired people a way to supplement their income without losing their primary residence. The ability to bring in another income during your later years can be a great asset. While reverse mortgages definitely have their benefits, dealing with reverse mortgage lenders can be tricky. You want to make sure that you cover all of the bases with them along the way to getting a mortgage done. Here are a few important questions that you'll want to make sure you ask your reverse mortgage lender.
1. What is the Interest Rate?
Many retired people rush into a reverse mortgage because they need the money in order to pay the bills. Their house may be the only asset that they have and limited funds coming in from outside. If they're living on social security alone, then their monthly income is very small compared to what it takes to live. Therefore, they might see a reverse mortgage as an easy way out. They might walk into a bank that they've done business with for 50 years and just sign up for a reverse mortgage without checking out the facts. The interest rate is one of the most important parts of the mortgage and you need to find out what they are offering. You should also shop around to make sure that you get the best rate on your reverse mortgage.
2. What are the Closing Costs?
Another important thing to know is exactly how much this mortgage will cost you. If you spend too much on closing costs, you might negate all of the other savings on the loan. Each lender has their own standards for how much closing costs are. Therefore, at your particular lender, the closing costs might be higher than the average. Ask them exactly how much it will cost and find out what they are charging you for. If a particular cost seems bogus, don't be afraid to ask them about it. If their explanation doesn't satisfy you, ask them to remove the fee. If they won't do it, feel free to shop around.
3. What Happens after the Mortgage is Done?
Once they pay you the entire amount of the loan over time, you need to know exactly what will happen. Ask them what their procedures are and find out what you have to do. Will you be able to stay in your house as long as you want? Are there time restrictions? If there is a time limit on how long you can stay, you might have to sell your house before you are ready.
Most reverse mortgages are supposed to allow you to stay in your house as long as you want. However, you might run across some lenders that will want you to pay them back immediately. This will require you come up with thousands of dollars at once, which might not be feasible. While it shouldn't be an issue, just make sure that you have everything you need in writing.
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