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.
Those refinancing with the reverse mortgage can use funds in any manner they deem necessary. I find most are getting themselves out of their current mortgage to free up money. Others want to pay off debt or to supplement income.
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.
Furthermore both the fixed and adjustable rate products for reverse mortgages rival those charged for traditional forward mortgages.
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.
All things being equal a reverse mortgage is very strong. The costs are not equal and must be factored when considering a reverse mortgage.
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.
As the loan ages it will become clear to you that the annualized cost goes down over time.
The idea is to give you real data to help you determine, based upon the actual costs, if the reverse mortgage is for you.
Many people don't have much of a choice. They have to go forward with the reverse mortgage. For others it takes some evaluating.
Those refinancing with the reverse mortgage can use funds in any manner they deem necessary. I find most are getting themselves out of their current mortgage to free up money. Others want to pay off debt or to supplement income.
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.
Furthermore both the fixed and adjustable rate products for reverse mortgages rival those charged for traditional forward mortgages.
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.
All things being equal a reverse mortgage is very strong. The costs are not equal and must be factored when considering a reverse mortgage.
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.
As the loan ages it will become clear to you that the annualized cost goes down over time.
The idea is to give you real data to help you determine, based upon the actual costs, if the reverse mortgage is for you.
About the Author:
I'm guessing you want more California reverse mortgage information. Don't mess around. Click on that link. Or this one... Solve problems with this guide to the California reverse mortgage here.
posted by Credit Counseling at
3:17 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home