Can I get a reverse mortgage on a second home? The answer is yes, but listening to a financial adviser is not always a good idea…
Reverse mortgages have been gaining popularity with good reason. This type of mortgage is basically a cash advance with interest, all based on the equity of the home.
Can I Get a Reverse Mortgage on a Second Home?
Traditionally, this type of mortgage was limited to the primary residence. In recent years, more lenders are permitting reverse mortgages on second homes. For some people, a reverse mortgage on a second residence can work out extremely well, better than refinancing through a second mortgage or other tools used for gaining access to equity. With refinancing, there’s always a risk of foreclosure if the loan is defaulted on. This isn’t true with reverse mortgages, because no payments are being made to the lender.
Can I Benefit From Getting a Reverse Mortgage on a Second Home?
You may benefit from a reverse mortgage on a second home if you’re a senior citizen or approaching the age of retirement. A reverse mortgage on a secondary home can be used to finish paying off the mortgage on the first home, or just help with cash-flow problems. A reverse mortgage might not be the right choice if you plan on leaving the property to relatives, as the loan will need to be paid off once the owner passes away or the home is sold. Reverse mortgages are also used to pay off health care bills and credit card debts.
Conclusion
Now that we’ve answered the question, “Can I get a reverse mortgage on a second home?” and covered the possible benefits of doing so, let’s look at the downside. Reverse mortgages often times have expensive starting costs. Additionally, some people are warned by their financial advisers not to listen to their counselor’s advice and encouraged to jump into the mortgage blindly. This can lead to much regret, since reverse mortgages are not for everyone. Remember to thoroughly research reverse mortgages before taking one out.
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