Reverse mortgages pros and cons tips to avoid mistakes
Let's talk about reverse mortgages pros and cons. Everyone knows a reverse mortgage is for homeowners who are 62 years old or older. A reverse mortgage allows the homeowners to remain in their home and is a loan with an interest rate that is taken against the equity in their home. The interest rate is somewhat lower than on a normal home loan and the closing costs remain the same, the fees the lender's charge can be as much as double as when purchasing a home with a regular home loan.
The loan can be used to pay off any mortgage that may be left on the home and can be given out as a lump sum payment, a line of credit or the homeowner may choose to receive monthly payments or the homeowner can also choose to receive any combination of the line of credit and monthly payments. This may be a better choice if some work needs to be done on the house you can use the line of credit to get the work done and have the monthly payment as well.
Some choose the monthly payments to increase the amount of monthly income they have to live on. We all know that sometimes the income we have to retire on is a paltry sum compared to some of our counterparts, or our portfolios have taken a hit especially in this bad economy and there isn't as much as there once was so a monthly payment can come in handy.
Reverse mortgages pros and cons mean as long as you live in your home you do not have to repay anything. The loan gets repaid when ever the home is sold and the amount owed is never more than the house is worth. Those exorbitant lender's fee get rolled into the loan or will be taken out of the proceeds of the loan so the only upfront cost will be the appraisal fee.
As the homeowner you will be required to attend a HUD counseling session to close the loan. Pay attention because if you receive too much money in a one month period you may adversely affect your Medicaid eligibility. So structure the payments you get so that doesn't happen. This is to your benefit.
Qualifying for a reverse mortgage is easy, all you have to do is meet the age requirement. Your present income or credit score do not come into play at all. You only have to have enough equity in your home and be 62 years old. You would have a much more difficult time getting a traditional mortgage at the age of 62 and are about to retire. As retirement nears your monthly income will no doubt go down and you will be less like to make the payments required on a traditional mortgage so if you are in your home is would be your best bet to apply for a reverse mortgage.
Do some homework, so to speak, when considering applying for a reverse mortgage. Find an agent who knows all the ins and outs of reverse mortgage pros and cons and not someone who has an agenda. You do not need high pressure when looking for a reverse mortgage and is the agent you find has an interest in getting you to sign with them or they will benefit from selling you the loan then you need to find someone else. You should make sure you do not have to pay more for less service.
Want to learn more? Go to: Real Estate for Retirement and learn about real estate investing and international markets. www.italianrealestate.org
Article Source: Messaggiamo.Com
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