Advantages And Disadvantages Of A Reverse Mortgage
By: Geoff Spencer -
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 dont have to
qualify your need or your credit to obtain a reverse mortgage. They
are easy to obtain and fast to close. Its 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.
Geoff Spencer is a staff writer at Finance Journal and is an occasional contributor to several other websites, including Online Business Gazette.
Article Source: http://www.articledashboard.com
Tags: mortgage
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