Warning: Undefined variable $custom_content in /home4/comcompare/public_html/mortgagenews/wp-content/plugins/code-snippets/php/snippet-ops.php(582) : eval()'d code on line 10
Latest posts by Amanda Byford (see all)
If you’re retired and coping with expenses on a fixed income then a reverse mortgage may be tempting.
But looking up closely reverse mortgages may be less appealing.
Apart from a number of reverse mortgage scams, lenders too can charge high fees and closing costs, and you might need to pay for mortgage insurance.
They also come with variable interest rates nullifying the idea of saving in long run.
It is ideal to understand the risks and rewards associated with a reverse mortgage so you can make a better-informed decision.
Reverse mortgages are only available on primary residences and for people over the age of 62, and available to homeowners who have paid of all or most of their mortgage and can tap into their home equity the loan comes as lump sums or lines of credit that can be accessed when the need arises.
The interest accrues on a monthly basis, and the loan need not be paid off until the homeowner moves out or passes away.
The accrued interest is added to the loan balance and the amount compounds every month.
If the homeowner moves out they need to close out the loan within one year. If the borrower dies, the heir must pay back the loan.
If you need access to cash, you can consider other alternatives like refinancing your mortgage, taking out a home equity loan, downsize your home, cash-out mortgage refinance, or HELOC.
Reference Source: Forbes
© All Right Reserved. 2022 | Compare Closing LLC | NMLS 1854416