Taking out any type of home loan is one of the biggest financial decisions that most people will make in their life. So when it comes to reverse mortgage questions, it's always helpful to prepare a list beforehand.
What reverse mortgage questions should you ask before you start the process? According to the Federal Reserve, there are quite a few that should be asked and answered before you decide whether or not these loans are right for you. We'll help kick start the process so that you can gain more insight.
What associated fees are involved?
As with any loan, reverse mortgages will have some fees that are associated with them. But these fees can be different than other loan types. Naturally, you'll want to know what fees that you will have to pay out of your equity funds before they are disbursed. For example, a typical home refinance has anywhere from $5,000 in fees or higher. Make sure you know what you'll spend on fees for a reverse mortgage.
How long does the process take?
A conventional home loan typically takes four to six weeks to close. But are you aware of how long it will take to close a reverse mortgage home loan. If you are planning your budget around the funds, it is wise to know how long the process can take so you can budget accordingly in the interim.
What will my interest rate be?
Just like any other type of a loan, a reverse mortgage will have an interest rate that is attached to it. But what will this rate be? How much will this interest cost you over the lifetime of the loan? These are important questions that you will want to have answers for.
What can I use the money for?
While some loans restrict how the funds are disbursed or used, others may not. A reverse mortgage is commonly used by older Americans as a way to tap into the existing equity in their homes. But what can you use this money for, and are there any restrictions attached to its usage?
How will the money be distributed?
How will you get your money? Will the bank just cut you a check? Will they send a wire transfer? Will it be a line of credit? Or will it be in monthly disbursements? Make sure you are aware of what your options are before you borrow.