When financial troubles come your way, your home's equity may be your saving grace - but should you sell your home or get a reverse mortgage in these instances?
When deciding, should you sell your home or get a reverse mortgage, the biggest factor may be where you are planning to live. If you want to live in your home and cannot move, due to circumstances like medical reasons or even sentimental reasons, you should not sell your home. You must leave your home if you choose to sell it - so if the house means a lot to you, your only choice may be a reverse mortgage, or some other form of loan. Selling the house is only an option if you do not mind leaving it.
Of course, selling your home may have other advantages. If you are under the age of 62, you will not be able to get a reverse mortgage - and will have to settle for either a home equity loan or a second mortgage. These will require that you pay back your loan with monthly installments, which may not be something you can do or are interested in. In these cases, selling your home may be a good idea. You can take the proceeds from the sale and buy a smaller or different house outright, or choose to rent a home and live off of the money you receive.
Selling a home isn't the easiest thing - so when asking should you sell your home or get a reverse mortgage, you should also consider the fact that not all houses sell. If you are over 62 and qualify for a reverse mortgage, you may be able to stay in your home and get money based on the equity in your home, without having to go through the procedure of selling a home in order to get the equity from it. You won't need to repay your reverse mortgage, unless you leave your home permanently or are deceased (in this case, your beneficiary will need to repay the mortgage).
If you want to leave an estate to beneficiaries, however, selling your home may be the easiest thing for them. After a reverse mortgage, your beneficiary will need to sell the home themselves, or repay the loan in order to keep your home. If you sell your home before your death, you can leave the proceeds from this sale to those in your will without making them have to work to get your estate cleared.
There are many, many issues to consider when choosing between selling a home and getting a reverse mortgage. Should you sell your home or get a reverse mortgage? Only you will know which of the two scenarios fit your situation.
About the Author
Barry Waxler writes about the disadvantages of a reverse mortgage at UFCAmerica.com.
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