Are you considering a reverse mortgage to get some much needed cash in these trying economic time?  If yes, you need to make sure you are fully aware of all the reverse mortgage pros and cons. Although many that get a reverse mortgage, are getting it  to help get through some tough financial times, it can be used by people with many different incomes or assets!  But it is important to know exactly what you will be getting when you apply for a reverse mortgage.

Because so much publicity seems to be negative on reverse mortgages (usually because of a lack of correct information) let me start with the negatives:

Although many feel the reverse mortgage closings costs are a lot more than regular mortgages, I actually did a study which showed the costs (not including the required HUD Mortgage Insurance) were 4.0% to 4.3%.  So they were close, although the mortgages insurance does add 2%, but that also protects you, the lender, and your heirs from ever owing more than the house is worth.  Another point about this though, IF, and that is an important if, you keep the reverse mortgage for a longer period of time, at least 10-15 years or more, the APR (bottom line cost to you) is around 5-7% which is right in line, and even better than a lot of regular mortgages!  

A reverse mortgage will probably reduce the amount of equity in your home that you will leave to your heirs. Your heirs will be responsible for paying off the balance of the reverse mortgage when you die - and that can be done with their own mortgage if they want to keep the home, or put the house up for sale. You must keep the property taxes, homeowners insurance and if it applies any Homeowners Association or Condominium Fees paid and current.  You must also keep the home in good condition. If you fail to make the required taxes, insurance, or fees current, the lender can require that the reverse mortgage balance be paid or foreclose on the property.  While this is extremely rare, it can happen.

A reverse mortgage might impact your ability to receive Medicaid and Social Security, although this is rare.  You must receive independent reverse mortgage counseling before you can be approved for the reverse mortgage.  But this is an excellent safeguard!

On the positive sides of a reverse mortgage:

A reverse mortgage will provide you with a tax free source of income or line of credit for the rest of your life. You can choose how you want to receive your money - lump sum, monthly payment (fixed number of years OR the rest of your life!) or a line of credit. A reverse mortgage is designed to keep you in your home the rest of your life.

Another great thing about a reverse mortgage, is that you will never owe more than the value of your home when it comes time for repayment.  You can have a mortgage currently on the home, or be free and clear of all mortgages, and still qualify for the reverse mortgage (providing you have enough equity). Your credit score and income are not used in the approval process for the reverse mortgage. (Although they will do a credit check to look for liens or judgments)  Your age, and home value and mortgages if any, are taken into consideration for approval. You never have to make a monthly payment on a reverse mortgage. This repayment becomes due only upon your death (or both of you if married), if you sell, or move from your home. The amount of money you receive will not impact your social security or Medicare eligibility.

The more you know about all the correct reverse mortgage facts, the less likely anyone will try to take advantage of you.  So there you have the reverse mortgage pros and cons. Read over them carefully before you make your decision. A reverse mortgage is a big decision, and may even seem 'too good to be true' but they are regulated by FHA and HUD, so there is many restrictions in place to make sure you get the best loan possible for your situation.  A reverse mortgage literally can be a lifesaver if you are having financial difficulties later in life.  But it can also help you enjoy your retirement years with vacations, or just peace of mind knowing you have a secure roof over year head, and a little more money available to use if needed!

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Title companies & mortgage brokers, help your borrowers- arrange to have their loan signed and notarized in their home, at their convenience by a Certified Notary Signing Agent (CNSA)

Browse The Rain for a qualified and Certified Notary Signing Agent in your area.

Southwest Florida Notaries is open for your mortgage closing 24/7 at your location (Based in Murdock, FL, near Port Charlotte FL, but covering all of Southwest Florida - Manatee, Sarasota, Charlotte, Desoto, Lee and Collier counties)