We will address the three factors of a reverse mortgage that determine that amount of money that is available to you in this article.
1. Age. You do need to be at least 62 years old to qualify for a reverse mortgage, but some say that it will benefit them to wait until they are older. While you will get more money if property values and interest rates don’t change, in my opinion it does not make sense to wait. Interest rates may rise, and a small increase in rates will have a larger negative impact than being older will benefit you.
I want to talk about the exception to what I just said. The exception: If you are 62 or older and your spouse isn’t, should you wait until they are? The answer is most definitely, “it depends”. If you are in a hardship, or times are tough enough where you feel you could lose the home, it probably makes sense to do it now. Also, if the younger spouse has plans to sell upon the passing of the older spouse, it may make sense. The concern is that if you are not on the loan and your spouse passes away, you will be required to pay off the reverse mortgage or refinance it or sell. This can obviously be bad for you. Remember this: Don’t remove a person from title to get more money. Unless you are avoiding a hardship, it just doesn’t make sense.
2. The interest rates. Interest rates are at an all time low. Fixed rates are in the low 5′s. An interest rate hike of a percent or more could mean thousands of dollars less that you receive. Do you want to gamble with what the rates will be in 3 or 4 years?
3. How much is your home worth? Since the loan amount is based on the value of your home, you may be better off using today’s value, rather than hoping the value will increase enough to matter over the next several years. Trying to guess what your home will be worth in three years is pretty hard to do. Several clients waited a couple years to do a loan, only to be in today’s market with lesser values than they could have ever imagined. With those kind of decreases, you may have trouble getting qualified at all.
If it works, why wait? What are you hoping for? If the numbers work today, just do it. You can use a reverse mortgage to enhance your retirement today, with real numbers that you can use, based on today’s interest rates and values. If you are interested in seeing what you qualify for, try our FREE reverse mortgage calculator.
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