The amount of money available to you with a reverse mortgage is factored by three variables. We will examine those in this article.
1. Age. You do need to be at least 62 years old to qualify for a reverse mortgage, but some say that it will benefit them to wait until they are older. While you will get more money if property values and interest rates don’t change, in my opinion it does not make sense to wait. Interest rates may rise, and a small increase in rates will have a larger negative impact than being older will benefit you.
There is an exception to the previous paragraph. If your spouse is not at least 62 and you are, should you wait until they are of age? I can definitely say “maybe”. If you’re in a hardship and the only way out is a reverse mortgage, it probably makes sense to not wait. Another reason is if the spouse has no plans to occupy the home upon your passing or plans to move to another area near family. You should be concerned that the person not on the loan will be left without a home if their spouse passes away, requiring them to refinance or sell. Just remember: You shouldn’t remove a person from the title just to receive more money unless you are avoiding a hardship.
2. Interest rate is a large factor. Interest rates have reached in the low 5′s. A raise of just one percentage point could reduce the amount of money you will receive by thousands of dollars. Gambling that the rates are going to go lower in the next several years doesn’t seem like a good bet.
3. How much is your home worth? Since the loan amount is based on the value of your home, you may be better off using today’s value, rather than hoping the value will increase enough to matter over the next several years. Trying to guess what your home will be worth in three years is pretty hard to do. Several clients waited a couple years to do a loan, only to be in today’s market with lesser values than they could have ever imagined. With those kind of decreases, you may have trouble getting qualified at all.
If it works, why would you wait? What are you hoping for? If the numbers work today, just do it. You can use a reverse mortgage to enhance your retirement today, with real numbers that you can use, based on today’s information. You can see what you qualify for with our FREE reverse mortgage calculator.
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