70% of Seniors Not Clear on Reverse Mortgage
If you've somehow missed the tv commercials or junk mail trying to get you interested in the reverse mortgage you probably live a sheltered existence.
Truth be known most seniors have heard about reverse mortgages but still have very little understanding of what they really are.
So here we are. Here to make this subject clear.
To understand a reverse mortgage you simply need to understand a traditional forward mortgage. A forward mortgage is simply a loan utilizing equity in the house to back the security of loan.
What I painted was not just the picture of a forward loan but a reverse loan as well. This is what i want to get across to all those who think this mortgage is something it isn't. There is too much bologne flying around.
They are very similar. They just works a little differently.
The mortgage company doesn't really care what the money is used to purchase. It makes money on the interest and servicing of the loan.
There is any number of things we can do with the money from our mortgage. If its a purchase those proceeds are used to pay the seller. If it's a refinance it's limitless.
The home's equity is essentially non-liquid money the owner of the property may use for his own purposes.
Why do people use a reverse mortgage? Because they can access this money and never be forced to make payments to the lender.
Well, if the lender isn't receiving payments how does it stay in business, and why would it do this?
Reverse mortgages are true negative equity loans. That means since the borrower makes no interest payments the interest accumulates and accrues against the equity of the home.
Most times the mortgage lender is repaid its loan plus accumulated interest by the sale of the property. Either the borrower dies or the borrower sells voluntarily.
The title to the home is never out of the borrower's name or the borrower's heir's names in the event the borrower passes on and wills the home.
The reason why everyone is so hot and heavy for reverse mortgages is the fact no monthly repayment is necessary. That is great.
What people must understand is it is not the perfect answer to all financial situations. For example its closing costs can be prohibitively high in the wrong situation.
Truth be known most seniors have heard about reverse mortgages but still have very little understanding of what they really are.
So here we are. Here to make this subject clear.
To understand a reverse mortgage you simply need to understand a traditional forward mortgage. A forward mortgage is simply a loan utilizing equity in the house to back the security of loan.
What I painted was not just the picture of a forward loan but a reverse loan as well. This is what i want to get across to all those who think this mortgage is something it isn't. There is too much bologne flying around.
They are very similar. They just works a little differently.
The mortgage company doesn't really care what the money is used to purchase. It makes money on the interest and servicing of the loan.
There is any number of things we can do with the money from our mortgage. If its a purchase those proceeds are used to pay the seller. If it's a refinance it's limitless.
The home's equity is essentially non-liquid money the owner of the property may use for his own purposes.
Why do people use a reverse mortgage? Because they can access this money and never be forced to make payments to the lender.
Well, if the lender isn't receiving payments how does it stay in business, and why would it do this?
Reverse mortgages are true negative equity loans. That means since the borrower makes no interest payments the interest accumulates and accrues against the equity of the home.
Most times the mortgage lender is repaid its loan plus accumulated interest by the sale of the property. Either the borrower dies or the borrower sells voluntarily.
The title to the home is never out of the borrower's name or the borrower's heir's names in the event the borrower passes on and wills the home.
The reason why everyone is so hot and heavy for reverse mortgages is the fact no monthly repayment is necessary. That is great.
What people must understand is it is not the perfect answer to all financial situations. For example its closing costs can be prohibitively high in the wrong situation.
posted by Debt Consolidation Loan at
2:13 PM
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