5 Considerations Before Getting a Reverse Mortgage to Pay Off Debt
A reverse mortgage can be a great way to tap into the equity in your home to pay off debt. But there are a few things to consider before taking out a reverse mortgage, like whether you’re eligible and how much debt you have.
Eligibility: To be eligible for a reverse mortgage, you must be at least 62 years old and have equity in your home. You’ll also need to meet financial and credit requirements.
Debt Amount: How much debt you have will affect how much you can borrow with a reverse mortgage. If you have a lot of debt, you may not be able to borrow enough to pay it all off.
Interest Rates: Reverse mortgage interest rates are typically higher than traditional mortgage rates. This means you’ll accrue more interest over time, which will increase the amount you owe.
Fees: There are a variety of fees associated with reverse mortgages, including closing costs, origination fees, and servicing fees. These fees can add up, so be sure to factor them into your decision.
Repayment: With a reverse mortgage, you don’t have to make monthly payments. However, the loan must be repaid when you die, sell your home, or move out of it for more than 12 months. If you have heirs, they may have to repay the loan if they want to keep the home.
If you’re considering a reverse mortgage to pay off debt, be sure to weigh all of the factors before making a decision. A reverse mortgage can be a helpful tool, but it’s important to understand the pros and cons before taking one out.