One Reason the Reverse Mortgage Stinks
If you are a home owner, aged 62 or older, with a good amount of equity you have the opportunity to use a reverse mortgage to solve a financial problem.
Many people don't have much of a choice. They have to go forward with the reverse mortgage. For others it takes some evaluating.
These days people are using the reverse mortgage to pay off a forward mortgage to eliminate the mortgage payment, supplementing income, paying off medical bills, and for extra money for leisure activities.
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.
To put it bluntly reverse mortgage closing costs are quite high.
You gotta wonder why this is the case.
Well, the biggest reason are the origination fees, mortgage insurance and title insurance are based upon the appraised value rather than the mortgage amount. The other main point is HUD insurance is two percent.
Do some basic math and you can see how quickly the costs can add up.
When deciding upon going with a reverse mortgage these costs must be considered. It's not just the interest rate.
Reverse mortgage companies provide a disclosure which discusses the cost of the mortgage annually. It takes into consideration these closing costs.
The document will show annualized costs over various years in the future.
You will notice the further you get away from closing the cheaper the loan actually becomes.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
Many people don't have much of a choice. They have to go forward with the reverse mortgage. For others it takes some evaluating.
These days people are using the reverse mortgage to pay off a forward mortgage to eliminate the mortgage payment, supplementing income, paying off medical bills, and for extra money for leisure activities.
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.
To put it bluntly reverse mortgage closing costs are quite high.
You gotta wonder why this is the case.
Well, the biggest reason are the origination fees, mortgage insurance and title insurance are based upon the appraised value rather than the mortgage amount. The other main point is HUD insurance is two percent.
Do some basic math and you can see how quickly the costs can add up.
When deciding upon going with a reverse mortgage these costs must be considered. It's not just the interest rate.
Reverse mortgage companies provide a disclosure which discusses the cost of the mortgage annually. It takes into consideration these closing costs.
The document will show annualized costs over various years in the future.
You will notice the further you get away from closing the cheaper the loan actually becomes.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
About the Author:
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posted by Debt Consolidation Loan at
2:45 PM
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