Reverse mortgages may also be known as a conversion mortgage. Basically, the homeowner receives money for the equity they have in their home and after they sell the home or pass away, they owe the money back, plus interest, most of the time. The homeowner must be 62 years of age. One advantage of these loans seems to be that some older people are in a financial bind. They may own they’re home but, they don’t have enough income to support themselves. So if they take out a reverse loan, they can live in the home. Government agencies and independent financial institutions provide reverse mortgages.
If you are thinking about a reverse mortgage, then it is important to know and understand the rights and responsibilities of the loan and how it works. Your home is very important and you, most likely, have worked most of your lives to have it, your home could be at stake.
Many options are available for reverse mortgages and all of these options can be very confusing. It would be best to be counseled on the right move to make. Another down fall to obtaining a home loan is that it can be an expensive process; you have loan fees, closing costs, appraisal fees, insurance, etc. With a reverse mortgage the home owner is still responsible for all property taxes, repairs, and insurance on the home. These loans can also be revoked for various reasons and then the whole amount you borrowed could be due at that time.
A few other disadvantages of the reverse loan are that the loan could affect your eligibility for federal or state assistance, like Medicaid or Medicare and maybe even social security benefits. It is important to understand that with this kind of loan you may not have anything to leave your heirs when you pass away, and they could even owe a bill in your name. So, the amount of money you are receiving for the loan, you could be leaving for your children. These mortgages would be ideal for someone without children or heirs. These loans can also be a lot less than what your home is really worth. It may even be a better idea to sell your home.
Reverse mortgages have a long list of disadvantages but, there are also many advantages. It is just very important to look at both advantages and disadvantages to make a sound decision. This can be a very big decision, think it through.