What are the pros and cons of a reverse mortgage?
my home is worth $50K but I only need $700 loan to pay property taxes
- Go with the flowLv 78 years agoFavorite Answer
Make a wise decision.
Google: pros and cons of reverse mortgages
This site has the clearest information I've seen.
Bankrate.com has been around for over a decade, you can trust the link.
Many suggest it is better to sell the home, and move to a small apartment or condo.
Since in older ages (after 80) a person may not want to be taking care of a home.
- glennLv 78 years ago
If you need money and would sell your home- but want to live there "forever" then this might be for you.
There will very likely not be any equity left when you die or move out later- the interest on the loan will eat it all up. So that is the cost that you pay. My Mom lives in a house where she has no equity because of this but she doesn't really care and neither do I. It is not a huge house and all on one floor so it works for her at 81 and will probably work for many more years. When she dies or moves to a retirement home the mortgage company will probably foreclose- it is a non recourse loan so if my Mom had an estate to hand down the mortgage company could not come against it for the difference.
The longer you live in the home after the reverse mortgage has been made- the better the deal you made- so it is kind of a bet on how long you will be healthy.
- ibu guruLv 78 years ago
Don't even think about taking out a reverse mortgage for a measly little $700 property tax bill. You knew that was coming, so why didn't you save up from your income? Poor planning.
Reverse mortgages are only for retirees over 65 who own their home free & clear. It is a mortgage, and your home will be foreclosed & sold by the lender when you die, or is due on sale if you sell before then. This is a rather expensive type of mortgage, they send you monthly payments until you die, but there are fees and points to pay, and often interest is higher than on a regular mortgage. Your heirs probably will not get the house! Also, that home is not worth much, so monthly payments will be very low, if any lender will go to the trouble of writing a reverse mortgage on it to begin with. Even if you are retired, over 65, and need to increase your monthly income, you won't get enough fast enough to pay that property tax.
- loanmasteroneLv 78 years ago
A reverse mortgage might not be the best solution for you if all you would want to get is $700 to pay the property taxes. You might be better benefited if you would go to your local credit union and borrow this amount, as a reverse mortgage would cost more than the $700 you would want to get. If you have other debts you would like to pay off then you might consider a reverse mortgage.
You might also attempt to get these funds from relatives and friends.
A reverse mortgage is good or bad based on the financial condition or situation of the seniors.
The primary requirement to obtain a reverse mortgage is that one or both of the seniors must be a minimum of 62 years of age.
If they are in a good financial condition and have planned well for retirement there is no need for a reverse mortgage.
A reverse mortgage is sort of expensive to obtain, so one of the first things you would want to do is find out the cost of this reverse mortgage. You would also be required to get and pay for an FHA appraisal. All repairs to the house found by the appraiser will have to be repaired prior to the mortgage closing.
You might also want to know the amount of funds that would actually land in the seniors hand. We do know one thing all mortgages would be paid off, as well as any other liens found on the property, plus the expense of the reverse mortgage, so on a good day the seniors would wind up with approximately the difference of the appraised value minus any mortgages paid off, any liens and the closing cost in their hands.
They can receive this in one lump sum or monthly payments spread out over a period of time.
They no longer would be required to pay a monthly mortgage, they could payoff any debts that are owed, with the remainder of the funds being placed in a bank account of their choice.
The other part to this reverse mortgage is that the seniors will be able to stay in the house as long as they both are alive.
Once they are no longer with us the heirs of the seniors would have to decide if you want the house or not. If the heirs decide the want to keep the house then they would be required to pay off the mortgage company that gave your parents the reverse mortgage plus interest as with any other mortgage lien.
If the heirs decide they did not want or could not afford the house then the bank would take legal action to secure the property, such as foreclosure.
A reverse mortgage is an FHA product, therefore you simply have to locate a local FHA approved lender in your telephone book. You might also google reverse mortgage followed by the city in which you reside or where the property is located.
Before a reverse mortgage might be obtained the seniors would have to go through extensive FHA counseling concerning the reverse mortgage so they would understand exactly know the reverse mortgage work and the effect it would have on them either positively or negatively.
I hope this has been of some benefit to you, good luck.