Advantages And Disadvantages Of A Reverse Mortgage
Any new venture has its own pros and cons. Now let us have a look on both the advantages and disadvantages of a reverse mortgage. One of the biggest advantages is no re-payments while you live in your home. This is a big draw for seniors looking for a loan. Many seniors opt to pay off their current loans and house payments. The second advantage is that you can live in your home as long as you wish. The amount you owe can never be more than the housing worth. There are also different withdrawal options.
You can choose to get your money in a lump sum, monthly installments, line of credit or a combination of all three. The decision is yours. The loan also has the benefit of tax-free proceeds. In fact, the IRS does not consider loan advances to be income. All those proceeds can go right into your pocket. Of course this is all determinant on the right lender too. Now that we have discussed the advantages, let us discuss the disadvantages. There are differences that people do not realize about reverse mortgages and conventional loans.
One disadvantage is the cost of a reverse mortgage, which can be very expensive. This is because of the rising-debt nature of the loans. A typical reverse mortgage may be $300 monthly with a yearly interest rate of 12% compounded monthly. Over ten years the homeowner could get $36,000 but owe $70,000! Another disadvantage is the complex contracts. The confusion from clients could hide hidden costs. It can become infuriating because the costs have no correlation to the amount borrowed. The third and most important disadvantage is the affect this could have on old age pensions, Medicaid and social security.
The problem is that many seniors are not aware of the advantages and disadvantages of a reverse mortgage and find out later. They realize that instead of getting more money they are losing money. There is the issue of a senior’s assets and estate. A reverse mortgage can actually reduce the value of these holdings. Down the road, it will affect any thing they may want to leave as an inheritance for their children and grandchildren. The only way to avoid these pitfalls is to choose your lender carefully. Then study the documents and do what is best for you.
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| New HUD Guidelines Give Counselors Ability to Withhold HECM . As part of the Department of Housing and Urban Development's new HECM counseling protocols, counselors are given the ability to withhold a HECM certificate if borrowers can't demonstrate basic knowledge of reverse mortgage concepts... | ||
InterContinental Capital Group Opening New Retail Mortgage Office In Boca Raton BOCA RATON, Fla.----InterContinental Capital Group , a direct to consumer mortgage lender, is pleased to announce the opening of a new office in Boca Raton, FL. Boca Raton offers an ideal business location with a vibrant economic and residential community that the company believes is currently underserved... | ||
Feds Issue SAFE Act Rule for Regulated Financial Institutions Federal Regulators issued final rules requiring mortgage loan originators employed by financial institutions register with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE)... | ||
HUD Study to Assess Consumer Protection Gaps for Reverse Mortgages - Reverse Mortgage Daily
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Bill to Extend Borrower Redemption, Tenant Rights Goes to Mass. Governor - Housing Wire
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Lender Calls Out MSNBC for Misleading Reverse Mortgage Reporting - Reverse Mortgage Daily
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Governor gets foreclosure protection bill A bill designed to boost foreclosure protections for renters and older homeowners is headed to Governor Deval Patricks desk. The Massachusetts Senate has given final approval to the bill that would bar tenants from being arbitrarily evicted from foreclosed properties and toughen consumer protections for senior citizens considering reverse mortgage agreements. The bill would also [.].. | ||
Mortgage company follows Quicken Loans downtown One Reverse Mortgage LLC, the nation's third largest reverse mortgage lender, will relocate its headquarters from Livonia and join its sister companies, Quicken Loans, Fathead and In-House Realty, in downtown Detroit... | ||
Realty Q&A: What to do with a reverse mortgage if you remarry If a couple takes out a reverse loan, but then one spouse dies and the survivor remarries, it's time to give the lender a call. Even though reverse mortgages are nonrecourse loans, there are reasons to consider refinancing into a new loan... | ||
Evening Standard; London (UK) - House prices 'set to go into reverse again' July 19, 2010 -- HOMEOWNERS face a second fall in house prices as the recovery in the property market slams into reverse. Experts today warned that... | ||
Herald, The; Glasgow (UK) - Homeowners spend billions on paying off mortgages but repayment rate July 16, 2010 -- UK homeowners are continuing to pump billions of pounds into paying off their mortgages as interest rates remain low but the rate of... | ||
Free Reverse Mortgage Counseling The US Department of Housing and Urban Development (HUD) announced today that $79 million (seventy-nine million dollars) will be made available for a broad range of housing counseling including how to qualify for a reverse mortgage... | ||
The Most Common 5 Reverse Mortgage Questions | Mortgages To make sure you have all the facts necessary to make a smart and informed decision about a reverse mortgage, Redwood financial Services has compiled a list of the 5 most commonly asked questions. The list should help you get started on ... | ||
Reverse Mortgage Loans For Homeowners In Need Of CashEURHow Are Senior . - Red, White, and Blue Press (blog)
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Senior Homeowners Save Up to $26,326.47 on Reverse Mortgage Costs A 62 Year Old Senior with a home valued at $625,000 would save $6,265.23 with the elimination of the servicing fee, $6,000 with the elimination of the origination fee, and now an additional $14,061.24 with the 4% closing cost rebate. This brings the total savings in this scenario to $26,326.47... | ||
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