The Sucky Part of the Reverse Mortgage
Many older home owners are beginning to use the reverse mortgage to get rid of some financial problem. To do so you need to be at least sixty two and have a pretty good equity position in the home.
Depending on your financial needs a reverse mortgage can be a great choice. For some folks it is the only choice.
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.
Why the reverse mortgage? Because people can use the equity in their homes they've built up for years to solve a financial issue, keep title the property, and never make periodic payments to the mortgage company.
On top of that interest rates charged for the reverse mortgages are very competitive with their conventional mortgage counterparts.
As long as the program is explained properly the reverse mortgage is a very strong financial option. However, it is not without fault.
To put it bluntly reverse mortgage closing costs are quite high.
There are really two main reasons for this..
Certainly one of the biggest culprits is that FHA charges mortgage insurance in the amount of 2% of the home's value. Other fees like the origination and title insurance are also based upon the home value.
It doesn't take much to see how these fees can total to a lofty number.
All things being equal a reverse mortgage is very strong. The costs are not equal and must be factored when considering a reverse mortgage.
When meeting with a reverse mortgage lender you will receive a Total Annual Loan Cost analysis which will show you the cost of the mortgage on an annualized basis.
The nice thing is it covers how much the mortgage costs in the coming years.
As the loan ages it will become clear to you that the annualized cost goes down over time.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
Depending on your financial needs a reverse mortgage can be a great choice. For some folks it is the only choice.
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.
Why the reverse mortgage? Because people can use the equity in their homes they've built up for years to solve a financial issue, keep title the property, and never make periodic payments to the mortgage company.
On top of that interest rates charged for the reverse mortgages are very competitive with their conventional mortgage counterparts.
As long as the program is explained properly the reverse mortgage is a very strong financial option. However, it is not without fault.
To put it bluntly reverse mortgage closing costs are quite high.
There are really two main reasons for this..
Certainly one of the biggest culprits is that FHA charges mortgage insurance in the amount of 2% of the home's value. Other fees like the origination and title insurance are also based upon the home value.
It doesn't take much to see how these fees can total to a lofty number.
All things being equal a reverse mortgage is very strong. The costs are not equal and must be factored when considering a reverse mortgage.
When meeting with a reverse mortgage lender you will receive a Total Annual Loan Cost analysis which will show you the cost of the mortgage on an annualized basis.
The nice thing is it covers how much the mortgage costs in the coming years.
As the loan ages it will become clear to you that the annualized cost goes down over time.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
About the Author:
So, you gotta get boned up on California reverse mortgage info. Well head on to that link. Or this one... You can pick up an excellent guide to the California reverse mortgage here.
posted by Credit Counseling at
2:29 PM
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