A reverse mortgage is a kind of mortgage loan that is secured against a house or any residential property, that could provide retirees additional income by providing them with access to their property’s unencumbered value. However, just like everything else, there are some disadvantages to this particular approach like high interest rates and costly fees, that could cannibalize a significant part of the homeowner’s equity.
Five Reasons Why A Reverse Mortgage Isn’t The Best Choice For You
The guidelines provided in this post refer to the home equity conversion mortgages or HECM, which are guaranteed by the Federal Housing Administration or FHA.
Your Heir’s Inheritance
When a homeowner dies, the estates or the spouse will repay the loan. The Federal Trade Commission said that this usually involves selling the house to generate the money required. In case the house will sell for more than the outstanding balance of the loan, the remaining funds will go to the heirs. However, if the house sells for less than the balance, the heirs would end up with nothing, and the FHA insurance will cover the shortfall of the lender. That’s why senior borrowers should pay mortgage insurance premiums on their reverse mortgage loans.
A reverse mortgage loan Myrtle Beach could complicate things in case you want to leave your home to your kids, who may not have the money that’s needed to settle the loan. Although a conventional fixed rate forward mortgage could provide your heirs a source of funds to secure homeownership, the might not qualify for this kind of loan, wherein, a treasured family home might be sold to someone they don’t know, just to immediately satisfy the reverse mortgage debt.
You Are Living With Someone
In case you have roommates, friends, or relatives, who are living with you who aren’t on the loan documents, they may eventually land on the street after you pass away. The boarders might also be forced to leave the house when you move out for over a year since reverse mortgages require that the borrowers reside in their main home, which has been used to take the reverse mortgage Myrtle Beach. In case a borrower dies, sells the house, or moves out of the home, the loan will become due right away. One way to get through this is to list those living with you on the loan documents, however, those who are living with you that are less than 62 years old cannot be a borrower on your reverse mortgage loan.
You have Medical Bills
Seniors often deal with health problems and many of them take out reverse mortgage loans to raise the needed money for their medical bills. But, they should be healthy enough to continue residing within the house. In case the health of an individual declines to a point he or she needs to move to a treatment facility, the loan should be paid in full, because the house no longer qualifies as the primary residence of the borrower. Relocating into a nursing home or perhaps an assisted facility for more than 12 months is already considered as a permanent move, under the regulations set by the reverse mortgage loan. Because of this, borrowers must be required to declare in writing every year that they are still residing in the house they’re borrowing against if they don’t want to deal with foreclosure.
You May Move Out Soon
In case you are thinking of moving due to health concerns or for some other reason, a reverse mortgage loan isn’t for you because the high upfront costs will make this type of loan economically impractical.
The costs included are inspection fees, closing costs, initial mortgage insurance costs, lender fees, as well as ongoing insurance premiums. Homeowners who sell or vacate their property suddenly will be given only six months to repay the loan. And although borrowers will receive the remaining sales proceeds above the owed loan balance, thousands of dollars worth of reverse mortgage costs have been paid already.
You Cannot Afford The Associated Costs
A reverse mortgage loan might not be sufficient to cover the home maintenance costs, property taxes, as well as homeowner’s insurance premiums. If you can’t pay these regularly, the lender has the option to call the reverse mortgage loan due, which could lead to the loss of your home.
Call Reverse Mortgage Specialist if you want to make sure if a reverse mortgage loan is the best option for you.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577
Charleston, SC 29401
Columbia, SC 29205
Greenville, SC 29607
864 920 2733