One Reason the Reverse Mortgage Stinks
Many older home owners are beginning to use the reverse mortgage to get rid of some financial problem. To do so you need to be at least sixty two and have a pretty good equity position in the home.
Depending on your financial needs a reverse mortgage can be a great choice. For some folks it is the only choice.
Those refinancing with the reverse mortgage can use funds in any manner they deem necessary. I find most are getting themselves out of their current mortgage to free up money. Others want to pay off debt or to supplement income.
It's pretty easy to see why the reverse is becoming so popular. Using this mortgage a borrower can solve their problem, not be forced to make payments to the bank, and never lose title to the home.
On top of that interest rates charged for the reverse mortgages are very competitive with their conventional mortgage counterparts.
There really is very little negative when it comes to the basic structure of the reverse mortgage. There is only one downside.
When comparing closing costs of forward and reverse mortgages you'll find reverse closing costs to be much higher.
There are really two main reasons for this..
The first being that costs are based upon the value of the home rather than the loan amount. The other is FHA charges 2% of the value for mortgage insurance.
It doesn't take much to see how these fees can total to a lofty number.
When deciding upon going with a reverse mortgage these costs must be considered. It's not just the interest rate.
Fortunately, when taking a loan application the lender will give you TALC disclosure which covers the annualized cost of getting this mortgage.
The nice thing is it covers how much the mortgage costs in the coming years.
As the loan ages it will become clear to you that the annualized cost goes down over time.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
Depending on your financial needs a reverse mortgage can be a great choice. For some folks it is the only choice.
Those refinancing with the reverse mortgage can use funds in any manner they deem necessary. I find most are getting themselves out of their current mortgage to free up money. Others want to pay off debt or to supplement income.
It's pretty easy to see why the reverse is becoming so popular. Using this mortgage a borrower can solve their problem, not be forced to make payments to the bank, and never lose title to the home.
On top of that interest rates charged for the reverse mortgages are very competitive with their conventional mortgage counterparts.
There really is very little negative when it comes to the basic structure of the reverse mortgage. There is only one downside.
When comparing closing costs of forward and reverse mortgages you'll find reverse closing costs to be much higher.
There are really two main reasons for this..
The first being that costs are based upon the value of the home rather than the loan amount. The other is FHA charges 2% of the value for mortgage insurance.
It doesn't take much to see how these fees can total to a lofty number.
When deciding upon going with a reverse mortgage these costs must be considered. It's not just the interest rate.
Fortunately, when taking a loan application the lender will give you TALC disclosure which covers the annualized cost of getting this mortgage.
The nice thing is it covers how much the mortgage costs in the coming years.
As the loan ages it will become clear to you that the annualized cost goes down over time.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
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posted by Debt Consolidation Loan at
3:29 PM
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