You should not consider a reverse mortgage just to pay off your existing mortgage. Selling the house would be better if your property has huge property taxes and maintenance costs.
If you are retired and have equity in your house that you can draw on with a reverse mortgage, the only situation that would make you change your mind would be if you were planning on a reverse mortgage because you would like to find a way of actually paying off your existing mortgage with the monies obtained from the reverse mortgage. You should really not consider a reverse mortgage to do that since the equity you are left with may be far less than what your house is worth and, regardless of the size of the house, will have to be maintained properly while you live in it.
What Do You Have To Pay To Continue To Live In Your Home With A Reverse Mortgage Attached?
When you take out a federally guaranteed reverse mortgage, you still have to pay your house insurance coverage, property taxes and maintenance expenses. If you are living on a small retirement income and plan to get a reverse mortgage to pay off your existing mortgage, you may become seriously house poor. You may live in your house for the duration of your life, but you will still have only your retirement income to pay for all of those aforementioned bills including your regular living expenses once you use up your reverse mortgage check.
What Should You Do With Your Existing Mortgage If You Get Approved For A Reverse Mortgage?
A reverse mortgage pays off your existing mortgage, pays off closing fees and other handling fees and arrives at a sum that is owed to you from the estimated value of your house. Your house may be worth 97,000 dollars and have an existing mortgage of 35,000 dollars. Your equity is 62,000 dollars minus the fees to arrange for your reverse mortgage. If you could sell your house for 97,000 plus dollars and buy a smaller house with the proceeds you would actually make a better retirement decision by paying less in property taxes, maintenance and insurance. That 62,000 dollars might be spent long before you pass away
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