 Pro's & Con's of Reverse MortgagesTuesday, February 7, 2012 - Article by: RALPH RICHARD GUERTIN -
Pros of Reverse Mortgages(RM): o RM, Allows the homeowner to stay in the home o RM, Can pay off existing mortgages on the home. o RM, Simple to qualify for as there aren't any minimum credit score and generally no income requirements. o With RM no monthly mortgage payments are due for as long as the homeowner lives in the home and meets requirements for maintenance and paying property taxes and insurance. o The homeowner receives payments on flexible terms: Credit line for emergencies o Monthly payments o Lump sum distribution Any combination of the above o A reverse mortgage cannot get "upside down" so the heirs will never be personally liable for more than the home is sold for. o Heirs inherit the home and keep any remaining equity after the balance of the reverse mortgage is paid off. o Loan proceeds are not taxable. o The interest rate may be lower than traditional mortgages and home equity loans. Cons of Reverse mortgages: o The fees on a reverse mortgage are the same as a traditional FHA mortgage but are higher than a conventional mortgage because of the insurance cost. The largest costs are: o FHA mortgage insurance o Origination fee o The loan balance gets larger over time and the value of the estate/inheritance may decrease over time. o Although Social Security and Medicare are not affected, Medicaid and other need-based government assistance can be affected if too much funds are withdrawn (and not spent) in one month. o The Reverse Mortgage program is not easy to understand. Contact me anytime via email or phone, as we are extremely well versed in the Reverse mortgage area....Ralph@absolutelowrates.com or 954-274-7725 |
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