A reverse mortgage could be a “viable proposition” for older homeowners looking to tap home equity — but they must heed the caution “look before you leap,” and educate themselves before they borrow, a recent article by The Huffington Post suggests.
In fact, reverse mortgage borrowers should arm themselves with six tips when shopping around for the loan, HuffPo writes.
Among these tips: Know that there are closing costs, just like with any other type of home loan. Understand that the principal balance will increase over time, but borrowers are only required to repay the value of the home, as most reverse mortgages come with a non-recourse clause.
Interest rates can vary, but borrowers can’t deduct reverse mortgage interest fees from their income taxes. And, finally, use a specialized lender, HuffPo advises.
“The best of all reverse mortgage tips that can be offered is to use a lender that specializes in issuing reverse mortgage loans,” the article states. “Set aside time to research each lender that you are considering and talk to your financial adviser to see if they can offer a referral.”
To read the full article, click here.
Written by Emily Study