|
Articles » Finance » Mortgage >> View Article
|
 |
|
 |
| A Reverse Mortgage Good or Bad Idea? |
By:
je Dunn |
|
|
There is much talk in the finance world about a supposed new service called the reverse mortgage which is designed to ease the burden on seniors when they are a homeowner. However, there are also horror stories about how many elderly people are being ‘ripped off' by unscrupulous mortgage lenders which just helps to confuse people so they do not know whether to pursue them or not. In actual fact, reverse mortgages can be good and bad, it just depends on your situation and they have after all been around for over forty years.
The main concern that has brought about this interest is the so-called ‘baby-boomers' that will be retiring during the next few years. What this means is that America will have an unprecedented number of people retiring with many having their main asset being their homes and gone are the days when the American worker retired at the age of 62, with a pension and social security, then passing by age 70.
People are living longer with fewer retiring on an adequate income which can provide their life needs so the huge appreciation most properties have experienced allows seniors an avenue to augment this growing need for income. The great benefit of a reverse mortgage is it pays out a monthly income but no repayments are made which means the debt just increases whereas with a traditional repayment mortgage, payments are made to lower the amount owed.
As far as the borrower is concerned they will not have to provide proof of any income and the money they have been receiving will be repaid in full when the loan is ready for repayment. Large numbers of seniors with no other form of income have found a reverse mortgage a savior and as they haven't had to provide proof of income or needed a credit check carried out.
Fortunately, this system also means that provided the loan is offered by the government, whatever is owed can never me more than the value of the property so it doesn't matter how long a person with a reverse mortgage lives in their home. For many people who retire, this is the only way they can afford to continue living in their home and have enough money to enjoy themselves although this can be a costly method if you do not intend to use the money supplied as a loan.
This is a major decision for most people and requires the help of a professional financial expert in reverse mortgages who can supply all the information necessary. Fortunately the amount paid on the charges and other fees for reverse mortgages is exactly the same from one company to the next but those arranged by mortgage companies may have more choices than those operated by the banks.
Many elderly people are worried about bringing up the subject with their children for fear they might believe they are trying to swindle them out of their inheritance but this generally couldn't be farther from the truth. It is an unfortunate fact that most children cannot afford to support their parents when they retire so are pleased that arrangements are available so they can continue living comfortably in their own home. |
|
|
|
|
 |
 |
 |
 |
|
 |
|
