Reverse Mortgages Have Some Hefty Disadvantages on Both Sides of the Fence
Reverse mortgages are a complicated monster that looms just out of reach until you have to have it, or so it seems. If you are 62 years old and struggle with day to day financing, or your house is in disrepair and you do not have the funds to mend it, or if you are strapped for cash during a medical or family crisis, a reverse mortgage may be your only option if you have less than stellar credit. This is because you do not need good credit, or even an income to qualify for a reverse mortgage.
Reverse Mortgages Can Be Refinanced
If you qualify, it is not all-good news if you need a reverse mortgage. There are so many reverse mortgage disadvantages that it is not even funny, beginning with losing the equity in your home. Of course, you will never have to worry about paying a home equity loan back because even if run out of equity, the possibility of refinancing your reverse mortgage is still on the table.
Goodbye Sweet Memories
A home equity reverse mortgage is a serious loan that has higher fees associated with it than any other kind of loan, including those that are considered to be high risk. This is because the lender is taking a chance of not seeing their money back for a long time. If you apply for a reverse mortgage at age 62 and live to be 112 years old, the lender is pretty much out of luck until then because you do not have to repay a reverse mortgage while you are alive and living in your home. The moment that you die, or move out permanently, the loan is due. If the equity is gone or close to gone, you heirs will not see a dime and may lose the family home. Goodbye sweet memories, if there were any. This is part of the reverse mortgages pros and cons that must be faced.
Make a List of Your Very Own
There is another reverse mortgage disadvantage that must be faced right off the bat. That is one of FHA insurance. You are obligated to get this expensive insurance for your home so that the lender can be assured they will be paid should you expire in a house fire. How ironic would that be? Make a reverse mortgages pros and cons list of your own before you consider applying for one. You will be happy that you did.