Reverse Loan and Mortgage Benefits
Facts you should know about reverse mortgages.
Many people over the age of 62 are in need of extra income to
help with living expenses, home improvements, long term care, medical expenses,
or other financial needs. For some of these people, reverse mortgages are the
solution to their financial problems. A reverse mortgage is when a person over
62 owns their home and takes out a loan so that they can get the cash they need
now and don’t have to pay in back until after they sell their home. However, it
is important to know how the lenders handle reverse mortgages and what types of
fees they charge.
Some of the important facts to understand about lenders and reverse
mortgages include:
The lenders will usually charge a loan origination fee, servicing fees, and other closing costs that will be added into the mortgage loan. The servicing fees may be reoccurring over the lifetime of the loan because the mortgage company will be servicing the loan until the home is sold.
The longer span of time you have a reverse mortgage, the more you own the lender. This is due to the fact that the lender charges interest on the loan and the longer you live in the home and are using the lender’s money the more you will owe on the loan in the end.
Your reverse mortgage can have variable or fixed interest rates. This means that if you have a variable rate it is not possible to determine how much you will own on the loan when it comes time for repayment.
The lender does not take responsibility for your homeowners insurance, property taxes, utility bills, or other expenses having to do with the property. You must maintain the property taxes and homeowners insurance in order for the reverse mortgage loan to remain in good standing.
Before taking a reverse mortgage out on your home make sure you have a full understanding about the fees and costs involved in this type loan. For more information n reverse mortgages contact the Department of Housing and Urban Development.