Apply for a Reverse Mortgage or Sell Your Home? How to Make the Best Decision

One of the main reasons older individuals are interested in reverse mortgages is because they don’t want to move from their homes. The majority of these people have been in the same houses for decades and the thought of moving elsewhere for their final years is not appealing at all and to some it is completely out of the question. However, for some of these folks moving is the better option. So, how do you decide if it is best for you to apply for a reverse mortgage or sell your home? The following information will likely guide you and help you decide between selling your home or using a reverse mortgage.

The first thing you should do is determine how much it costs to live in your current home and how much it would cost you to live in a smaller home, a condo, or even in an assisted living home. Comparing the costs will allow you to see what the most affordable option is. Of course, that does not mean you have to move but evaluating your options and determining the cheapest living arrangements for yourself where you will also be comfortable and happy is important. At that point decide how much money you could sell your home for. This should be a conservative amount that falls in with the averages in your real estate market. If you believe you can sell your home for $500,000 then it should really be valued at that and not just in your mind. Knowing how much you could sell your home for will also play into this equation. You will be able to see whether selling your home and buying a more affordable place and living off the rest is a viable option or whether the place you live is still the best place for you. You can’t really decide on a reverse mortgage if you don’t know how you would benefit by selling your home and living elsewhere.

Also, you need to determine how much equity you have in your home. Do you have enough equity that you would qualify for a large reverse mortgage loan or not? The answer to this question in addition to the others will let you know whether you should sell your home or take advantage of a reverse mortgage.

Things to Keep in Mind
Remember there are a lot of benefits to receiving a reverse mortgage. You only need to have equity in your home and be at least 62 years of age. Also, you will have cash in your hand to spend as you please. This might include a lump sum payment, monthly payments for life or perhaps a line of credit or a mixture of several. In addition, you will not have any monthly payment to make and will not be required to pay off your loan until you decide to sell your home, no longer live in your home, or die.

On the other hand, if you sell your home and buy a more affordable home then you will still own your home, have no monthly payments, and possibly have enough money left over to help supplement your retirement.

Making the Decision
Too often older individuals simply do whatever their neighbors are doing or whatever their banker tells them to do. This should not be the case. Each individual should evaluate his/her personal situation and then determine which options is best suited to them. Some individuals will find that the reverse mortgage truly is the best option for them while other individuals will realize that selling their home is a better solution.

There is no definite answer as to whether or not you should apply for a reverse mortgage or sell your home. It really is a personal decision that has many variables. These include how much your home is worth, your age, your income, and many more. Simply review your options and focus on what is best for you and not what everyone else is doing. When you do that then you will certainly determine what the best option for you is.