Why is a Reverse Mortgage a Good Idea?
Are you wondering if a reverse mortgage is a good option for you? They are for some people and they are not for others, it depends on many factors.
Reverse mortgages became popular in the 1960′s as a way for cash strapped seniors who wanted to continue to live in their own homes. They are something to consider if you are a senior who would like a little extra monthly income. If you are interested in setting up a line of credit or a lump sum payment as part or whole of your reverse mortgage, you may do which ever works best for you.
The thought of a monthly income sounds good but when do I repay the money?
You will not have to make monthly payments back to the lender unless you move or sell the house. When you die you family will be responsible for your debt taken from the mortgage and will have to make monthly payments or sell the house to pay off the loan. Interest and fees will also be due at this time.
What if the housing market continues to go down, can I owe more than my home is worth?
You have the option of getting income from your reverse mortgage for the length of time you live in the house. If the balance of the loan at anytime becomes more than the amount the home is worth you will still get the same monthly payments your originally set up. It does not matter how many payments you get over time or how high the interest rate gets. You will never owe more than the home is worth.
What are some eligibility requirements of a reverse mortgage?
It is very easy to qualify for these loans especially since income qualifications and credit scores are not part of the process. The amount you can borrow is based on interest rates, your age and the value of your house at the time you are taking out the loan. Upfront costs are high usually about $12,000 dollars but you will not actually owe the money until you move or die.
Related posts
- How Is A Reverse Mortgage Different?
- How Do I Pay Back My Reverse Mortgage?
- Can I Get A Reverse Mortgage On A Second Home?
- Can I Refinance A Reverse Mortgage?
- How Do I Get My Funds From a Reverse Mortgage?
One Response to “Why is a Reverse Mortgage a Good Idea?”
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Accepting a reverse mortgage offer should be done with caution. What a senior citizen can do is to accept money only for their needs so that they can stay afloat but not more than that so that there would be no problems in the future. What if in the future the house drops in value thus making the loan repayment too pricey for the heirs to pay? It would be like letting your heirs shoulder the burden of having your past debts add to theirs.
Additional information about reverse mortgage, although they can help supplement the borrowers income, the borrower will still be the one responsible for the payment of other house expenses such as yearly property taxes, insurance and upkeep of the house.
A danger of having that much money is that once a senior citizen decides to cash out on his home, if he spends all of his money he might need to sell his home prematurely to pay for this loan later on. It would be wiser to consult a trustworthy financial adviser, one who has the knowledge on how to deal with reverse mortgages.