Advantages And Disadvantages Of A Reverse Mortgage
With any new venture, there is the good and the bad. Let us look at the advantages and disadvantages of a reverse mortgage. One of the biggest advantages is no re-payments while you live in your home. This is a big draw for seniors looking for a loan. Many seniors opt to pay off their current loans and house payments. The second advantage is that you can live in your home as long as you wish. The amount you owe can never be more than the housing worth. There are also different withdrawal options.
You can choose to get your money in a lump sum, monthly installments, line of credit or a combination of all three. The decision is yours. The loan also has the benefit of tax-free proceeds. In fact, the IRS does not consider loan advances to be income. All those proceeds can go right into your pocket. Of course this is all determinant on the right lender too. Now that we have discussed the advantages, let us discuss the disadvantages. There are differences that people do not realize about reverse mortgages and conventional loans.
One disadvantage is the cost of a reverse mortgage, which can be very expensive. This is because of the rising-debt nature of the loans. A typical reverse mortgage may be $300 monthly with a yearly interest rate of 12% compounded monthly. Over ten years the homeowner could get $36,000 but owe $70,000! Another disadvantage is the complex contracts. The confusion from clients could hide hidden costs. It can become infuriating because the costs have no correlation to the amount borrowed. The third and most important disadvantage is the affect this could have on old age pensions, Medicaid and social security.
The problem is that many seniors are not aware of the advantages and disadvantages of a reverse mortgage and find out later. They realize that instead of getting more money they are losing money. There is the issue of a senior’s assets and estate. A reverse mortgage can actually reduce the value of these holdings. Down the road, it will affect any thing they may want to leave as an inheritance for their children and grandchildren. The only way to avoid these pitfalls is to choose your lender carefully. Then study the documents and do what is best for you.
| Is a reverse mortgage a reversal of fortune? (The Scranton Times-Tribune) Reverse mortgages are becoming a popular option for senior citizens who want to free up the equity in their homes, turning it into cash to supplement their fixed incomes. A different type of home loan, a reverse mortgage is generally only available to ho.. | ||
AIG shares drop after 1-for-20 reverse-stock split (AP via Yahoo! Finance) American International Group Inc. shares tumbled Wednesday after shareholders approved a 1-for-20 reverse-stock split to prop up the share price of the insurer as it continues shedding assets and spinning off some subsidiaries in an effort to repay the government and return to profitability... | ||
OCC's Dugan: Reverse Mortgages Could Pose Risks - Wall Street Journal
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Reverse Mortgages Leave Seniors at Risk, GAO Says HUD Defends . - Washington Post
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Reverse Mortgages - Think Carefully - Sunshine Coast Daily
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The Cash Account Plan EUR Reverse Mortgage Information Financial Freedom Senior Funding Corp., of Irvine, CA, offers the EURCash Account PlanEUR as a proprietary reverse mortgage product. The Cash Account Plan is available to anyone 62 years or older who own homes with a minimum value of $75000 ... | ||
McCaskill Holds Reverse Mortgage Hearing Monday (FOX 2 News St. Louis) Missouri Senator Claire McCaskill is big fan of Twitter. Sunday night, she tweeted "I'm going to be on FOX 2 News in the Morning." And that's not all. On Monday in St. Louis, Senator McCaskill will hold a senate hearing a reverse mortgages. She talked about what to expect at the hearing... | ||
Breaking News: New HUD Mortgagee Letter Released on Refinancing . Breaking News: A new HUD Mortgagee Letter was released on Tuesday, HUD Mortgagee Letter 2009-21. The letter covers the HECM refinancing of existing loans. Some important points: - A technical correction to 73 FR 51596 and the 24 Code of ... | ||
Brett Carter Joins NGFS Investor, LTC Global - Business Wire (press release)
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New Companies, News Jobs at Reverse Mortgage Jobs Online Here are a few of the new jobs posted to Reverse Mortgage Jobs Online: Reverse Mortgage Originator (Nationwide) iReverse Home Loans Reverse Mortgage Originators (California) The Senior Equity Group, Inc. Reverse Mortgage Careers ... | ||
Reverse Mortgage Servicer Celebrates 40 Years, Optimistic Outlook . Lansing, MI based Celink is celebrating its 40th year of business and despite being located in the heart of an economically troubled state like Michigan, John LaRose, CEO of Celink reflects on the past and looks with o... | ||
Who, What, Where - Boston Globe
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Lawmakers Look at Rising Scams for Reverse Mortgages (Builder Magazine) Jun. 30--WASHINGTON -- The housing bubble, lax regulatory oversight and an influx of shady loan professionals have made lawmakers uneasy about the safety and soundness of the popular government-backed reverse-mortgage program... | ||
GAO: HUD Needs to Improve Oversight of Reverse Mortgage Counseling A new report from Government Accountability Office (GAO) found that the Department of Housing and Urban Development's internal controls do not provide reasonable assurance that counseling providers are complying with HECM counseling ... | ||
Reverse mortgage to buy a home | md va dc | Mortgage Blog . Reverse mortgage to buy a home | md va dc | Mortgage Blog EUR Posted by in Insurance; 0 Comments. Bridge loans and other gap financing methods can't be used to meet the cash investment requirement or pay closing costs nor can subordinate ... | ||
NY Times: Reverse Mortgage Enables Seniors to Purchase Home New York Times writer Bob Tedeschi wrote about the HECM for purchase program which enables older borrowers to use a reverse mortgage to buy a principal r... | ||
Reverse Mortgages for Home Purchases - New York Times
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McCaskill Urges Reform on Reverse Mortgages (Builder Magazine) Jun. 30--UNIVERSITY CITY -- Poor oversight of the fast-growing reverse mortgage industry leaves older people vulnerable to scams and could burden taxpayers, U.S. Sen. Claire McCaskill said Monday at a hearing on the federally insured loans... | ||
Reverse mortgages focus of hearing near St. Louis (Jefferson City News Tribune) UNIVERSITY CITY, Mo. (AP) -- Reverse mortgages, increasingly used by seniors to help fund retirement or pay unexpected medical bills, are often accompanied by excessive fees and marketed using overly aggressive tactics, Sen. Claire McCaskill said Monday... | ||
Buying an investment property? Some loan tipsEUR - OCRegister
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Lawmakers look at rising scams for reverse mortgages - Kansas City Star
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AIG shares fall after reverse-stock split (Crain's New York Business) American International Group Inc.'s shares fell more than 20% Wednesday afternoon, one day after shareholders approved a 1-for-20 reverse stock split... | ||
Five good tips for mortgage shoppers (Seattle Times) After a recent spike in mortgage rates, some consumers have been wondering whether they've missed their chance to refinance into an ultra-low rate. Fear not: While the conforming 30-year fixed-rate mortgage has been bumping around the mid-5 percent-range, it's possible that rates could continue to fall... | ||
Reverse mortgage pros, cons (Reno Gazette-Journal) In tough economic times, reverse mortgages are being touted as a way for qualified seniors to keep possession of their homes and tap into much-needed cash... | ||
Reverse Mortgage Servicer Celebrates 40 Years, Optimistic Outlook . - Reverse Mortgage Daily
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