Yes you heard it right there are some negatives to reverse mortgages. It isn't all good. As usual it is up to the consumer to make his own decision-but ONLY after you have all the facts.
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REVERSE MORTGAGES ARE MORE EXPENSIVE The interest rate may be the same as a regular mortgage (probably not though) but the closing costs will be higher. The front end points can be expensive and they can vary widely from lender to lender.
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OPERATING EXPENSES CONTINUE The normal costs of home ownership continue-real estate taxes, homeowners insurance, home repairs, and mortgage insurance just for starters need to be paid.
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AGE BONUS The older you are when you apply the more money you can get. An 80 year old will get more than a 65 year old.
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MEDICAID RAMIFICATIONS Depending on where you live (each state is different) a reverse mortgage could have a negative impact on Medicaid eligibility. There is free counseling available to guide you.
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READ THE FINE PRINT The terms of some lenders allow them to throw homeowners out of the house after a prolonged absence like a nursing home stay.
On the flip side-the positive side-the benefits of a reverse mortgage are unique and very beneficial. Here's the main one:
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FINANCIAL FREEDOM As baby boomers near the age of retirement actually percentage wise very few of them have the financial ability to pull it off comfortably. A reverse mortgage may enable literally hundred of thousand of homeowners to live comfortably in retirement.
As always do your homework; compare lenders, costs, rates and terms; shop, shop, shop; get the free counseling; and keep your eyes open.
Reverse Mortgages have become increasing popular in the last several years and will only grow in popularity as the baby boom market looks for ways to finance their retirement.
Jack Krohn is a leading free lance writer on Home Equity and Mortgage issues with over 40 articles to his credit. He is also the #1 author of Home Security Articles in the country according to Ezine Articles.
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