Be fully informed about the problems with reverse mortgages

When you are young and able minded, sometimes even then getting a mortgage can be challenging.  There are so many options available like open or closed terms, fixed or variable mortgage rates, interest negotiations, paperwork and the list goes on.  As we get older and our homes appreciate, there is an interesting vehicle available for seniors to consider called reverse mortgages but there are problems with them.  We will discuss the problems with reverse mortgages below.

Problems with reverse mortgages include that it is available to borrowers that are 62 years of age or older and it is a loan that converts home equity into tax-free cash.  This is not the problem; the problem is that they are extremely expensive.  If you received say $300 month for 10 years from a reverse mortgage, you would get $36,000 in total, but you would likely own in the range of $70,000 to the lending institution.

This is paid back when the property is sold.  Other problems with reverse mortgages include the number of both front and back end fees that can drive the cost of the mortgage sky high.  Sometime these fees aren’t as obvious as they should be and can catch the senior off guard.  Contract terms can also be extremely confusing so before going forward, we recommend your consult your lawyer so that all terms and conditions are clearly understood.