Reverse mortgage disadvantages but it can still work to your advantage
A reverse mortgage is a way to allow seniors aged 62 or older to utilize all the equity they have built up in their home over their lifetime. This equity can be taken out in the form of a loan and can be used for anything from new furniture, a vacation or to take some classes up to final costs, but there are some reverse mortgage disadvantages that need to be considered.
As long as the residents continue to live in the home they do not have to repay the loan. Nothing changes for the homeowners; they are still responsible for maintaining the property, keeping full coverage insurance on the property and paying all property taxes and association dues.
Some of the advantages to getting a reverse mortgage are;
1. With a traditional mortgage loan you will have to have a very good credit rating to get approval. With a reverse mortgage our credit score doesn't matter. Even if you have a poor credit rating or high levels of debt you can still get a reverse mortgage as long as you are over 62 and have high equity in your home. Many seniors will use the equity in their home to pay off some of their debt.
2. A reverse mortgage is a fairly low risk type of loan. Since you don't have to make any payments at all, as long as you stay in your home, you don't have to worry about getting in over your head with monthly payments. You don't have to worry about defaulting on your loan and ruining your credit.
3. You can use the money for anything at all that you want. There are no restrictions to how you can use the loan money that you receive from your home. This can help out many seniors who find that their retirement accounts have taken a sizable hit and may not be enough to meet their needs.
Some reverse mortgage disadvantages are:
1. You have to maintain your home as your primary residence. If you ever find yourself unable, or unwilling to continue to live in your home, the loan will have to be repaid immediately. This could pose a problem for anyone who finds it necessary to move into an assisted living facility.
2. Upon your death, the home will need to be sold to repay the loan. This duty will fall to your heirs and can become a burden. For that reason, carefully discussing this option with your family before you get the reverse mortgage is a good idea. If it is an FHA secured loan then the FHA will sell the home.
3. The costs associated with a reverse mortgage are usually a lot higher in part due to the fact that the bank can wait for years to get their money back. Cost such as closing costs and other loan origination fees are considerably higher than with a traditional loan.
The bottom line is this: carefully consider the reverse mortgage disadvantages as well as the advantages and look at all your options. You may find that you have other, better, options you can choose to help out with your short term finances.
TAGS: reverse mortgage disadvantages
Article Source: Messaggiamo.Com
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