Should you sell your home or get a reverse mortgage? Read here for tips on how to decide if you should sell of get a reverse mortgage!
Due to the current poor economy and decreased stock market, many retired individuals have lost a sizable portion of their retirement accounts and overall wealth. Because of this, many people need to tap into their home’s equity to pay for living expenses. For these people, deciding between selling their home and getting a reverse mortgage is a tough decision.
How Old You Are
The first factor to be considered when deciding if you should sell your home or get a reverse mortgage is how old you are. If you are relatively young and desperately need money, you may be better off by selling your home. This is because a reverse mortgage lender gives fewer funds to younger people, and you may not get enough money to meet your needs.
How Much Do You Need
The next factor to be considered when deciding if you should sell your home or get a reverse mortgage is how much money you need. In almost all situations, a reverse mortgage lender will want to keep a borrower’s LTV below 75%. This means you will not be able to liquidate up to a quarter of your home’s value. If you need closer to 100% of your home’s equity, than you may need to sell your home.
How Long Will You Stay in Your Home
The next factor to be considered when deciding if you should sell your home or get a reverse mortgage is how long you will stay in your home. Reverse mortgages often comes with origination fees that can cost up to $6,000. Because of this, it does not make sense to get a reverse mortgage if you plan on moving out or selling your home within the next few years.
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