Be cautious about reverse mortgages. This should be a last resort.
Who can qualify? Well, you must be 62 or older, and they are designed for people who already own their homes but need extra money. They need money right now. But, remember: they are loans! What you’ll be able to get is about 60-75% of the value of the home. You can get that as a lump sum, or you can get that as monthly payments, or you can set up a line of credit. So, they can be very appealing, because you get to stay in your house; but you don’t’ have to sell the house to unlock its value. There are no monthly payments like there are with most loans. But, the loan comes due at death or at the sale of the home.
There are some drawbacks with these. There are very high upfront fees, usually around 5%. And, they’re high fixed rates—higher than regular mortgages—and these are built into the value of the loan they are giving you. It drains the value of that home. It is a LAST resort only if you don’t have other means to help you be supported in the meantime. Read the fine print.
There are some other options. You can do a straight refinance of your home with a cash out of the equity if you need some money right now. Or, you can do just a straight line of credit.
So, be very, very careful with these reverse mortgages. Don’t get tempted by all of those celebrities advertising them online or on the television. You can get into trouble. They are loans. A last resort.