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Is a reverse mortgage really a good thing?

With all the hoopla is about on the reverse mortgage for senior program in the U.S., you would think it's the next big redemption for seniors on fixed income. Before we jump to this conclusion, we examine some of the pros and cons of reverse mortgages.

Advantages and Benefits

The best thing that ever happened as a result of a reverse mortgage for seniors, is the improvement that could make it in your monthly cashflow. If you get a reverse mortgage, the current mortgage on your house, if there is one, fully paid, and thus make your obligation to make monthly payments and walks away, instead, you are a monthly check from the reverse mortgage lender for asa obtained as long as you live in the house! For most seniors, but make a significant improvement to their monthly cash flow budget. Suppose, for example, you have a mortgage payment of $ 500 per month. With the reverse mortgage, that would be gone and you could have a $ add 400 to verify your income every month. The net difference of $ 900 per month to much on the budget of the typical senior's!

Since most are insured Reverse Mortgages from the federal government through HUD are the monthly checks to you guaranteed, even if you have lenders withdraw from the business, or if you were to survive the term of your mortgage.

Other seniors can always reverse> Mortgage to handle an unexpected financial obligation, as a huge medical bill, nursing home payment. In this case, it would eliminate still on their existing mortgage (and pay), but the reverse mortgage proceeds would be in a lump sum or a line of credit instead of monthly payments preserved. If you apply for a reverse mortgage, these methods are optional payment, and you can even mix them into a small lump a bill and take the cover willRest in the form of monthly payments.


As the old saying goes: "There are no free lunches!" The disadvantage of a reverse mortgage is that you live from the equity in your home. When you move from your home or pass, the reverse mortgage to pay off, so this means the home will probably be sold. The amount that you plan to leave to your heirs will be inevitably reduced.

There are significant costs(Examination fees, loan origination fees, surveys, etc, etc.) in connection with obtaining a Reverse Mortgage. For this reason, a reverse mortgage is not something that should be entered into casually. You should plan on living in the house for at least five years to pay the additional costs of reverse mortgage itself.

With a reverse mortgage, there is a requirement to purchase insurance from HUD reverse mortgage each year. This is to protect you include problems with the liquidity of the lender and your payments, you should survive the mortgage.

To protect you from being cheated or "demolished" by unscrupulous fraudsters, the government also sets a credit counseling before to get into a Reverse Mortgage. Usually this takes the form of AARP a consultation that is free and help educate you on the reverse mortgage and help you determine whether an inverse> The mortgage is right for your particular financial situation.

The need for homework

The Reverse Mortgage for Seniors program is a godsend for you, or it could be completely wrong for you to consider. Make sure you do your homework, take your time and good advice from an independent source who did not receive money from your decision, a reverse mortgage. Remember the rule of the Barber Shop – "Do not ask the barber if you need a haircut;Are cut off you are sure! "

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