When deciding whether to obtain a reverse mortgage, there is one (if not many) important question that often gets overlooked: is it practical/affordable for the borrower(s) to continue living at home? In other words, before you can even think about reverse mortgaging your property, you must consider whether the property is even suitable for you. Actually, it’s not enough to merely address current suitability; one must also consider future suitability. You are probably in excellent health now. At some point in the unforeseeable future, however, you probably won’t be. While this possibility may seem very distant, you may regret not taking it into account if circumstances change after you receive your reverse mortgage.

This issue is explored in detail by the National Council on Ageing (NCOA) Reverse Mortgage Booklet. According to NCOA, there are four factors that should be taken into consideration: changing needs, safety, ease of use, and isolation. The first three factors refer to the home itself. Is it uncluttered and well laid-out, from the standpoint of an elderly person (i.e. the future YOU). Is it handicap accessible, or can it at least be made handicap-accessible? Will the home require significant upkeep/repairs? The final factor – isolation – refers to location. Is the home conveniently located, from the standpoint of an elderly/handicapped person? Is it possible to get around and run errands without the use of a car? Is the location such that you would be worried about the prospect of becoming lonely?

Next, you need to consider how you can obtain outside help if need be. Again, this might be a difficult notion to fathom in your current (healthy) state, but at least give it a thought. Will you be able to afford the cost of outside care, such as a home health aid? If not, perhaps you should account for this in your reverse mortgage budget. Otherwise, you need to ask yourself whether you can depend on “non-remunerative” care, whether from family, friends, charitable organizations, etc. What will you do when you can no longer care for yourself? Will you move into an independent/assisted living facility? If so, how will you pay for this, given that you may have depleted a significant portion of your home equity (from the reverse mortgage) in the mean time?

Not only do you need to determine whether it’s practical for you to remain in your home (for at least the 5-10 years that is required to make a reverse mortgage economical), but you must also determine whether it’s affordable. Ask yourself how your reverse mortgage will impact your future finances, especially at the point at which you can no longer take care of yourself. If you spend all of the proceeds on the reverse mortgage now, what will you do after your health declines and you need to seek outside help? In short, it’s essential that you be as financially far-sighted as possible when deciding whether to obtain a reverse mortgage today.

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