I meet with senior homeowners that are thinking about getting a reverse mortgage. Would it be a good idea to take out a reverse mortgage? “Am I Going To lose my property? Whose property is it really after I get a reverse mortgage? Those are all very good questions and supply a starting point to educate yourself regarding this loan. Other parts of life have benefits and drawbacks. When it comes to getting a reverse mortgage, some serious thinking and decisions will have to be made. Below is a variety of information about reverse mortgage that you can take into account.
Take a look at these other pages: Woodlands Mobile Home Park, Royal Palms Mobile Estates, Idle Wheel Mobile Estates, Merritt
The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
Increase your monthly cash flow for as long as you live in the home. You can learn more about reverse mortgage equity loansĀ here.
You can modify your plan whenever you want from the line of credit, cash out, monthly checks, or a combination (depending on what remains). One of the really cool features about the line of credit it that the unused part of credit line grows at the current rate plus 1.25%. An excellent choice for baby boomers who wish to remain in familiar surroundings and in the same community where they have resided for years.
Moving might cause mental problems for a lot of elderly homeowners. Memories were created in your “home sweet home”, and close proximity to loved ones and residing in your area could be a good choice.
Reverse Mortgages can satisfy your existing mortgage loan or debts, though your financial obligations are transferred to your Reverse Mortgage balance. (Your home does not have to be free and clear to qualify.) Almost all of the closing costs can be lumped into the loan with the exception of the counseling fee and appraisal.
You can remain in your house irrespective of what is owed on your Reverse Mortgage. You can never be forced out of your home provided that your real estate taxes and homeowner’s insurance are paid and as long as you maintain your home.
It is possible to refinance out of the reverse mortgage in to a traditional loan presuming you qualify and there is equity in your home.
Neither you, your estate or your heirs can ever owe any more than the value of the home.
This is what is known as a non-recourse loan. To put it differently, you have no personal responsibility for this loan, neither does your estate or your heirs.
There are lots of really cool features with this loan such as the fees are limited and interest rates are capped.
Heirs may get a tax break once the property is sold and the interest is all paid at once.
Your beneficiaries may be able to claim the interest from your mortgage on their income taxes after your passing away. (Be sure to speak to your tax advisor for guidance.)
Everybody likes the good stuff or the pros. Pretty easy, right? Sure, the dutiful old loan officer always gives you the good parts, but there are some things that may be drawbacks to Reverse Mortgages. Here are the cons:
The Negatives of Reverse Mortgages:
They can and frequently are higher in price than a conventional loan. However, you should not really compare them as they are different loan products.
In the event that whatever you are leaving for an inheritance is your home, there may or may not be equity for you to leave behind. A Reverse Mortgage is a growing debt loan since you are not making mortgage payments. It is the complete opposite of a conventional home loan where equity will increase as mortgage payments are paid.
Selling your home can provide a higher return on your investment than a Reverse Mortgage.
These refinancing options really do not seem sensible if you are intending on moving in the future.
In the event that you do not pay your taxes or insurance the lender may foreclose on your home.
The lender can also begin the foreclosure process if you haven’t resided in the home for Twelve straight months.
You might not be entitled to needs based programs and help such as Medicaid.
When NOT to get yourself a Reverse Mortgage:
An equity loan are often lower priced way to get cash out of the home.
{When your main intention is repairing your house, a community grant may work better.|In the event you only need to add a roof, windows or other energy efficient options. If that is the case, funds and assistance may be available. Go here for more reverse mortgage information.
If you are ill and assisted living or a nursing home is coming up, you should not choose a Reverse Mortgage.
In the event your family says you should not get a reverse mortgage, listen to them and have a meaningful discussion with them and the loan officer, together.
If your kids encourage you to move in with them, this may be an excellent option to staying in your own house.
If you are using the home or property for agriculture.