TAMPA – There has been a great deal of talk about reverse mortgages but how do you know if it’s right for you?
First, let’s start with the basics.
According to the Florida Reverse Mortgage website a reverse mortgage is offered to homeowners who are at least 62 years old and older. It is FHA insured and differs from all other mortgages because it is a loan that is not due until the homeowner is no longer living in the property, proved the home is maintained in good condition and property insurance and taxes are paid.
The site defines said most people decided to go with a reverse mortgage to pay off an existing mortgage therefore stopping monthly payments. Another reason some people use it is to pay for medical and daily living expense, according to a 2006 survey conducted by the American Association of Retired People (AARP).
If you are wondering if you qualify for a reverse mortgage, an FHA calculation considers four factors when determining eligibility, they base their decision on four factors. They are the current interest rate, if the rate will be variable or fixed, age of the youngest homeowner and the location of the property.
Before you decide if a reverse mortgage is for you, you have to weigh all of the aspects of the decision both good and bad.
A few of the pros surrounding a reverse mortgage is it extinguishes the current mortgage on the home, a reverse mortgage will never get “upside down” so the heirs will never have to pay more than the value of the home and the homeowner can stay in the home permanently.
One common misunderstanding surrounding a reverse mortgage is that the mortgage will be sold to a bank. Lenders who finance reverse mortgages only want to make money off the interest of the loan. The homeowner will maintain the title of the home in their name. The lender adds a lien onto the title for the amount borrowed so that the lender can be certain they will ultimately get the money they loaned returned to them.
Some of the cons include reverse mortgage not being understood by most and therefore it becomes too confusing for some to consider and the fees are the same as a traditional FHA mortgage but may be more than a traditional mortgage due to insurance costs.
Comments(1)