subject: Reverse Mortgage Pros and Cons You Need To Know [print this page] Reverse Mortgage Pros and Cons You Need To Know
The Cons of a Reverse Mortgage:
1. (PMI) Mortgage Insurance - Any time you do an FHA loan, you will have mortgage insurance. This insurance is there to protect you in the unlikely event that your home is worth less than what you owe on it. The only time this realistically happens, is when we go though a recession in real estate and property values drop. The good news is that you can never be kicked out of your home or forced to move, regardless of the balance. This is all thanks to the mortgage insurance.
2. Interest that Compounds - This is good if you earn it, but most people don't like paying it. One definition is; interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. You have probably earned it if you have had a savings or retirement account.It is the trade off on a reverse mortgage for not needing to make payments.
3. Using Your Children Inheritance - Say what? Who does the money belong to? If you need the money to make your retirement better, why shouldn't you spend it? Use what you need and then pass on the rest to your heirs. Don't blow the money (unless you want to), but use some of it if you need to. It is your money.
The Pros of a Reverse Mortgage:
1. Ability to Maintain Your Independence - Having to ask you children for financial help to cover you expenses could be the most embarrassing thing to do. What if you needed to move in with your kids for financial reasons? With a reverse mortgage, you can use your home's equity and keep your dignity.
2. Keep your home - Have you recently thought of moving? How painful of an idea is that? A reverse mortgage will allow you the financial edge to be able to keep your home while affording the retirement you deserve.
3. Affordable Living - So many seniors are broke and live in an impoverished state. Most aren't even aware anymore because they have been living that way for so long. You can use the equity in your home and create a lifetime income stream by taking a reverse mortgage on your home.
4. No More Mortgage Payments - A reverse mortgage requires no monthly payments, and you won't need to pay back the loan as long as you live in the home as your primary residence. That extra "income" can be pretty useful in tough times.
Since fees are not a consideration for getting a loan, they weren't mentioned above. The new programs available will allow you to (usually) waive any origination frees and possibly get a substantial credit towards your mortgage insurance. The reduction in fees is in the neighborhood of 50%, saving you thousands of dollars.
I have a confession to make. I am a reverse mortgage loan officer, but I truly believe that a reverse mortgage is the best tool out there to help a senior. While I agree they are not for everyone, there are a lot of folks that could benefit from one. It makes me cringe to hear someone say that a reverse mortgage is bad. They are neither bad nor good. It just depends on your need and how you use them.
It's your turn to decide. Could this tool help you? Will it enhance your life? If you need more reverse mortgage information that is free and no obligation, visit our web site and read up.
