A reverse mortgage can be a wise move for some, but it's also a tricky one.
With a reverse mortgage, you give the bank a mortgage on your home based on the equity, and the bank pays you a set amount every month for an agreed-upon period of time.
You must be at least 62 to be on the reverse mortgage.
You need to live in the home, renting it out isn't allowed, and keep up with maintenance and property taxes. And just like any other mortgage, if you default, you stand to lose the home.
Anyone considering a reverse mortgage should take some best practices into consideration before signing.
Above all, experts advise putting both names on it if you're married. Many people are tempted to put just one person on it because the payments are higher; also, the older the person, the larger the payment. But the problem is, if the spouse on the paperwork passes away, the other must pay a large bill or the house is sold.
The decision whether to get a reverse mortgage is a matter of budgeting and your family's finances. You'll also want to make sure you have other sources of income, as the reverse mortgage alone generally won't be enough to cover all of your household expenses, let alone any major repairs or health issues.
Rick Good spent ten years in the newspaper business, including with The News & Observer (Raleigh, NC) and The Greenville News (Greenville, SC). He co-wrote, with Melinda Coleman, Rutledge to Riley: Governors of South Carolina, 1776–Present (Published by The Greenville News), and is the author of Mind Games Trivia #1 (Amazon). He has recently spent 15 years creating original trivia content through Sounds Good Mobile Entertainment and continues that with his new company, SGME Software. He edits The Smart Reader’s money, real estate, and business coverage.
