A reverse mortgage allows you to turn a portion of your home equity into cash. Unlike other types of loans where your credit score is a major factor, applying for this loan doesn’t require any financial checks. So long as you’re financially capable of paying off the associated costs, fees, and property taxes, a bad credit history won’t matter.
Benefits of the Loan
You can use your reverse mortgage to pay for sudden financial expenses, such as extensive home repairs, a new roof, sudden medical bills, or long-term care. You can use it to buy a new home, too, says the U.S. Department of Housing and Urban Development.
Different Types of Companies
When people think of reverse mortgages, they automatically think of getting a loan from big banks. However, there are other lending companies you can consider. Plenty of small to midsize banks are making a name for themselves in the industry. You only need to know how to find them.
Interest Rates and Fees
You already know that going with this option will cost a lot in terms of fees and interest rates. The next best thing to do, then, is to make sure you end up with the best fees and interest rates possible. Shop around. Don’t go for the first or second bank you find. Get between three to six prospective choices. Then, compare rates, fees, and services to find the best reverse mortgage company for you.
Payment Types
You can receive proceeds from the loan in three different ways: as a monthly cash allowance, a line of credit, or a combination of the first two. Choose the arrangement that best works for your financial situation.
Loan Amount
The older you are, and the more valuable your property is, the more money you can get out of this arrangement. Has your home appraised to give you a ballpark of how much you can expect?
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