Reverse Morgages Pros and Cons

What you should know about Reverse Home Morgages...

There are many pros and cons to getting older. One of the pros is a reverse mortgage option that is now available and becoming a very popular choice for many. Many Americans have spent years making timely payments on their home mortgages. There are many pros to this type of reverse mortgage. The reverse home mortgage provides these Americans a special type of home loan letting them convert a portion of the equity in their home into available cash. The equity that has built up over the years can be paid directly to you as the homeowner. Unlike the cons in a traditional home mortgage loan where you make monthly payments over a long period of time, this reverse mortgage has the advantage of not needing to be repaid until you no longer reside in that home as a primary residence.

The reverse home loan has additional pros in its favor. It is available to use at the borrower’s discretion and can be used to pay off medical bills, invest in home improvements, or take a long deserved retirement vacation. Another pro to the reverse home mortgage is that it is available in a fixed-rate and variable-rate option. Borrowers can change their disbursement options as often as they wish making the reverse mortgage a flexible plan for many people who cannot predict when the funds will be needed.

Reverse home mortgages have only a few cons of which you should be aware. There are fees associated with opening a reverse home mortgage. The fees include an origination fee, possible third-party closing costs, mortgage insurance premiums, and a monthly service fee. Most of these fees can be financed as part of your loan similar to that of the Annual Percentage Rate often used for forward mortgage comparisons. There is also a fee for the required HUD counseling services, which is not included in your estimate and cannot be financed as a part of your loan.

So whether you choose to use the funds you have accrued in your home equity or wait for the rainy day fund, the reverse home mortgage is a safe, secure plan with many pros in its favor and only a few cons. You have worked hard building this equity, it is only fair that there is a good option for you to access the funds to create a more comfortable retirement. The reverse home mortgage is worth applying for all Americans over the age of 62 who reside in their home as a primary residence and have paid off their mortgage or owe very little of their existing mortgage. The time is not to create a more stable daily financial situation.