Reverse Mortgage Flexible About Prepay
It doesn't really go with the territory but quite a few seniors get in touch with me and ask if they can pay the mortgage company monthly.
I have reservations about their intentions to make monthly or periodic payments.
The question I have to ask is where is the money going to come from to make those payments. After all, reverse mortgage customers generally get reverse mortgages because they lack dollars. There is typically no reason this will change.
But the fact is some will make occasional payments. So, I always get the question of stipulations regarding making payments on the mortgage.
The fact is you can make payments anytime you like on reverse mortgages and not be in jeapardy of some form of pre-payment penalty.
You may be asking why someone would want to make payments. Well, people have reasons from hating debt of any sort to using the mortgage as a tax shelter. This latter reason is one of the biggies.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
In order to get the write-off the borrower must make payments. It's at least a good reason to ask about repercussions.
The thing about getting this interest write-off is that there exists an order in which one can apply payments when prepaying a reverse mortgage. The vast majority of borrowers stick the closing costs into the mortgage. These costs must get paid prior to payments applying to interest.
So, the government has rules for this too.
One big expense when paying closing costs is the origination fee. That can easily be up to two percent of your appraised value when you first obtained your loan.
The origination fee is a big write-off. Make sure you run this stuff by your CPA. They are more abreast than I and things change.
I have reservations about their intentions to make monthly or periodic payments.
The question I have to ask is where is the money going to come from to make those payments. After all, reverse mortgage customers generally get reverse mortgages because they lack dollars. There is typically no reason this will change.
But the fact is some will make occasional payments. So, I always get the question of stipulations regarding making payments on the mortgage.
The fact is you can make payments anytime you like on reverse mortgages and not be in jeapardy of some form of pre-payment penalty.
You may be asking why someone would want to make payments. Well, people have reasons from hating debt of any sort to using the mortgage as a tax shelter. This latter reason is one of the biggies.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
In order to get the write-off the borrower must make payments. It's at least a good reason to ask about repercussions.
The thing about getting this interest write-off is that there exists an order in which one can apply payments when prepaying a reverse mortgage. The vast majority of borrowers stick the closing costs into the mortgage. These costs must get paid prior to payments applying to interest.
So, the government has rules for this too.
One big expense when paying closing costs is the origination fee. That can easily be up to two percent of your appraised value when you first obtained your loan.
The origination fee is a big write-off. Make sure you run this stuff by your CPA. They are more abreast than I and things change.
posted by Debt Consolidation Loan at
7:02 AM
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