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Reverse Mortgage Disadvantages | HECM Loan MTG Pitfalls For 2014

Advantages Disadvantages

There are no mortgage payments due while you are living in the property.
You’re responsible for property taxes/insurance/maintance. Any accrued monthly costs such as the mortgage insurance premiums, interest charges, and lenders service fees are due when the loan is paid off.

If the last surviving owner passes away, the loan must be repaid before the home’s title can be transferred to the borrower’s heirs (most lenders give 12 months for the heirs to make a decision).

Reverse mortgage loans do not affect Social Security or Medicare benefits

Payments may impact Supplemental Security Income and Medicaid payments

Income from a reverse mortgage is not taxable.

Interest is compounded on reverse mortgage and cannot be deducted from income taxes until it is repaid.

The value of the house, not the homeowner’s current income is used to determine eligibility. There currently are no income, health, nor credit score requiremnets for seniors interested in the HECM loan.

In order to qualify for a reverse mortgage seniors need to be at least 62 years of age or older, own their home (have equity available), and have attended a mandatory HECM counseling session.

You are able to receive payment in several different ways such as taking a credit line, a lump sum, or a combination of both. With interest rates at all time lows now is a great time to consider one.

The HECM income ends when your home equity term is reached, you sell your home, your home is not your main principal home for 12 consecutive months, or the last borrower passes away.

Homeowner can enjoy retirement from the comfort of their homes, wihout having to sell the property thus persecing a legacy for the next generation. Tap into your existing equity to fund a better retirement wihout monthly payments or without having to sell or move homes.

You must pay off the remaining home mortgage with your own money or with proceeds from the reverse mortgage loan.

Homeowners can keep the title to their homes until they pass away, move, sell their home, or reach the end of their loan term.

This is a loan agaisnt the property, seniors are responsbile for the property taxes and if payment is not made the bank can take your home. This rarely happens but it’s worth bringing up that there is still some foreclousure risk.

Lenders cannot go to your heirs for repayment of your loan if the house sells for less than what was borrowed.

In some instances, the home must be sold to pay back the reverse mortgage when borrowers cannot make tax payment (seniors should always check their reports soo

Upfront costs or fees can be folded into the reverse mortgage from the start, instead of paying them at the beginning of the loan.

Usually the interest rate and upfront costs are higher for reverse mortgage than for the traditional mortgage or other equity loan. Upfront fees can add up over time.

Interest rates can be fixed or adjustable, but most are adjustable rates.

Reverse mortgages’ have variable rates that move up and down with the market conditions.

Money can be used for any purpose such as for home repair and maintenance, long-term care, medical needs, or paying debt.

Borrower will need to pay interest on the following when these are rolled into the loan: insurance premiums, broker’s fees, closing costs, and service fees.

As the owner’s age increases and the home equity increases, the amount that can be bor- rowed increases.

The homeowner is still responsible for paying property taxes, paying homeowner’s insurance, and maintaining and repairing the home. If not, your loan becomes due.

“There is a negative perception in taking a reverse mortgage from a Bank directly thus RMLD facilitates the ability for us to compare your offer with other lenders. The savings of money and time are measurable, there is never any pressure, we are always happy to explain how the program works to seniors.”