What is a Reverse Mortgage?
6 min. read by Jason Gelios REALTOR®️/Author
Many people have asked me what a reverse mortgage is and how someone can benefit from it. Like anything else in life there
are pros and cons to this type of mortgage.
I'm going to share with you what a reverse mortgage is and a couple pros and cons that go along with it.
A reverse mortgage is a loan that takes the equity in a primary home and provides monthly cash to the homeowner.
You have to be at a minimum age of 62 or older to qualify. Lenders also typically look for 50% or more equity in your home. Some lenders may look at your debt versus income and credit score just to get an idea of your situation. These factors don't necessarily count as qualifiers.
A homeowner looking to get this type of mortgage will also be required to go through a consumer counseling class to make sure they know what they are signing up for.
So what happens when the loan is due?
Usually the loan becomes do when the homeowner has passed away or has not paid taxes and insurance. A reverse mortgage can also come do if the homeowner moves or sells the property or doesn't make needed repairs to maintain the home.
Here are a couple pros to this type of loan:
It provides a steady stream of income that can last for years and can convert the equity in your home into a pile of cash without having to move out.
The money is tax-free because the IRS considers this a loan. It will also not affect your Social Security or Medicare payments.
Here are a couple of cons to this type of loan:
With a traditional mortgage the debt decreases every month. The reverse mortgage has you increasing your balance on your home but provides you income in hand. There is also the chance that the debt may eventually exceed the homes market value depending on what the market is doing. Children who want to inherit the house could be stuck with a steep bill.
If you are considering a reverse mortgage, you will want to ask yourself these questions,
Do I want to maximize what I can leave to my heirs?
Am I going to stay in my home for the majority of my retirement period?
How much money do I need monthly to be comfortable?
Can I pay the taxes, insurance and handle all obligations associated with a reverse mortgage?
Do I really understand what this loan is and what it does?
Doing your due diligence to see if a reverse mortgage is right for you is crucial to making the right move.
5 min. read By Jason Gelios REALTOR®/Author
You made it through the home buying process and you have the clear to close. Now what?
This is the time to schedule your final walk through.
While there are many other things to potentially keep an eye out for during a final walk through on a home, these are the three major things to look for.
1. Check that all systems are still working properly.
Do the appliances still work? Home heating properly? Do what you can to ensure these things are still working.
2. Verify all requested work has been done.
Was something in the home in need of repair before you can move forward? Make sure the work has been done by simply looking at what was done. You may have been shown proof of a repair with something like a repair order or picture of a new unit. Whatever you had the seller repair or replace, make sure it was done.
3. Make a list of questions that you may want to ask the seller during or after your closing.
Take advantage of the fact that you may be in front of the seller at closing and ask questions to gain knowledge on how things work. Ex. How does the alarm work, when is trash day, etc.
These are just some of the things that you should be aware of when doing a final walk through.
Enjoy your new home!
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More details to come!
Jason Gelios is a Husband and Father. After that, a Top Producing REALTOR®, Author of the books 'Think like a REALTOR®' and 'Beating The Force Of Average', Creator of The AskJasonGelios Real Estate Show and Expert Media Contributor to media outlets across the country.