The Sucky Part of the Reverse Mortgage
If you are a home owner, aged 62 or older, with a good amount of equity you have the opportunity to use a reverse mortgage to solve a financial problem.
It is definitely case by case in terms of whether the reverse mortgage is the right decision. For many it certainly is.
These days people are using the reverse mortgage to pay off a forward mortgage to eliminate the mortgage payment, supplementing income, paying off medical bills, and for extra money for leisure activities.
Why the reverse mortgage? Because people can use the equity in their homes they've built up for years to solve a financial issue, keep title the property, and never make periodic payments to the mortgage company.
Additionally, interest rates are very competitive. Traditional mortgages have interest rates just barely better than the reverse.
As long as the program is explained properly the reverse mortgage is a very strong financial option. However, it is not without fault.
Quite simply closing costs are high. And they are high relative to traditional forward mortgages.
There are really two main reasons for this..
Well, the biggest reason are the origination fees, mortgage insurance and title insurance are based upon the appraised value rather than the mortgage amount. The other main point is HUD insurance is two percent.
Put your calculator to given home value and these costs are fairly hefty.
All things being equal a reverse mortgage is very strong. The costs are not equal and must be factored when considering a reverse mortgage.
When meeting with a reverse mortgage lender you will receive a Total Annual Loan Cost analysis which will show you the cost of the mortgage on an annualized basis.
The nice thing is it covers how much the mortgage costs in the coming years.
The idea of the disclosure is to show how the actual cost of the mortgage reduces as you get further and further away from closing.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
It is definitely case by case in terms of whether the reverse mortgage is the right decision. For many it certainly is.
These days people are using the reverse mortgage to pay off a forward mortgage to eliminate the mortgage payment, supplementing income, paying off medical bills, and for extra money for leisure activities.
Why the reverse mortgage? Because people can use the equity in their homes they've built up for years to solve a financial issue, keep title the property, and never make periodic payments to the mortgage company.
Additionally, interest rates are very competitive. Traditional mortgages have interest rates just barely better than the reverse.
As long as the program is explained properly the reverse mortgage is a very strong financial option. However, it is not without fault.
Quite simply closing costs are high. And they are high relative to traditional forward mortgages.
There are really two main reasons for this..
Well, the biggest reason are the origination fees, mortgage insurance and title insurance are based upon the appraised value rather than the mortgage amount. The other main point is HUD insurance is two percent.
Put your calculator to given home value and these costs are fairly hefty.
All things being equal a reverse mortgage is very strong. The costs are not equal and must be factored when considering a reverse mortgage.
When meeting with a reverse mortgage lender you will receive a Total Annual Loan Cost analysis which will show you the cost of the mortgage on an annualized basis.
The nice thing is it covers how much the mortgage costs in the coming years.
The idea of the disclosure is to show how the actual cost of the mortgage reduces as you get further and further away from closing.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
About the Author:
So, you gotta get boned up on California reverse mortgage info. Don't mess around. Click on that link. Go here too You can get a guide to the reverse mortgage in California at this website.
posted by Debt Consolidation Loan at
1:53 PM
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