Reverse mortgages are also known as conversion mortgages. Basically, the owner receives money for the equity he has in his house and after he sells the house or dies, he must pay the money back, plus interest, most of the time. Owner must be 62 years of age. One advantage of these loans seems to be that some seniors find themselves in a financial bind. They may own their home, but do not have enough income to support themselves. So if they apply for a reverse loan, they can live in the house. Government agencies and independent financial institutions offer reverse mortgages.
If you are considering 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 chances are you have worked most of your life to have it, your home could be at stake.
There are many options available for reverse mortgages, and all of these options can be very confusing. It would be better to be advised on the right move to make. Another downside to getting 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 homeowner is still responsible for all property taxes, home repairs and insurance. These loans can also be revoked for various reasons, and then the full amount you borrowed could be due at that time.
Some other disadvantages of the reverse loan are that the loan could affect your eligibility for federal or state assistance, such as Medicaid or Medicare, and perhaps even Social Security benefits. It’s important to understand that with this type of loan you may have nothing to leave your heirs when you die, and they may even owe a bill in your name. So, the amount of money that you are receiving for the loan, you could be leaving it for your children. These mortgages would be ideal for someone without children or heirs. These loans can also be much less than what your home is actually worth. It may even be a better idea to sell your house.
Reverse mortgages have a long list of disadvantages, but there are many advantages as well. It is very important to take into account the advantages and disadvantages to make the right decision. This can be a very important decision, think about it.