Advantages And Disadvantages Of A Reverse Mortgage
There are many benefits to obtaining a reverse mortgage. It
allows you to get the money you need to live on, pay medical
expenses, or what ever need you happen to have. You don?t have
to qualify your need or your credit to obtain a reverse
mortgage. They are easy to obtain and fast to close. It?s no
wonder they are so popular for a lot of older folks.
However there are a few disadvantages which are worth taking a
look at.
Heirs are left with a mortgage to pay off.
When you permanently leave your home because you move or die,
the home will have to be sold to pay off the mortgage. The
mortgage will be due in a lump sum. This leaves the task of
selling your home to pay off the mortgage to your heirs. If
they decide to keep the home, it is possible if they begin
payments on the mortgage within one year of it coming due.
A reverse mortgage has hefty fees.
The fees for a reverse mortgage are more costly than the fees
for a traditional mortgage. An additional 2 percent is added
for insurance and another 2 percent is added to the origination
fees. Closing costs are added as well so a $200,000 reverse
mortgage could potentially have $10,000 worth of fees added to
it and they must be paid first before the funds are dispersed.
Existing mortgage must be paid of with dispersed funds.
If a standard mortgage exists on the home when you obtain your
reverse mortgage, you will need to pay off in full with your
reverse mortgage funds or your personal funds.
A reverse mortgage can be ideal under the proper circumstances.
It is important to discuss the loan particulars with several
lenders to compare terms and to also discuss the situation with
your heirs so everyone is aware of what is going on.
About The Author: Geoff Spencer is a staff writer at
http://www.finance-journal.com and is an occasional contributor
to several other websites, including
http://www.onlinebusinessgazette.com.
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