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.
