Pros and Cons of Reverse Mortgages
The recent economic crisis is, fortunately, over, but many baby boomers are still feeling the effects. Most are in their 60s and 70s, an age in which they should have been looking in their rear view at their mortgages. However, many may still be struggling to catch up on payments on a home that have lost their value.
This is where reverse mortgage lenders can be helpful. Here are the pros and cons of reverse mortgages as explained by
Primary Residential Mortgage, Inc.
Qualifications
Reverse mortgages are only available to homeowners aged 62 years old and older, and holding equity in their primary residence. A reverse mortgage lender will make available the value of the equity as cash for the homeowner, so if you get a reverse mortgage, you can access it at any time. You can choose to get it as a monthly payment, a lump sum, or a line of credit.
Pros
Unlike most mortgages, you do not have to pay back any cash you receive from a reverse mortgage until you sell the home, move to another home, or die. When any of these events happen, the lender will then get back the money and interest accrued from the sale of the home or from the estate. You can use the cash for anything you want, including paying off your existing mortgage and other debts. You can also use it for your daily expenses or pay for sudden expenses, such as medical emergencies.
Cons
You do not have to pay back any cash you receive, but you do have to pay for closing costs and other fees, which can be high. If the lender pays for these costs, you will have to pay a higher interest rate at the end. You also have to keep your property in good condition and keep all property taxes and insurance updated. If you have plans to keep the property in the family, you will have to pay back any cash you received from the lender before you can do that.
A reverse mortgage can give you cash when you need it. It can help improve cash flow and pay off debts. However, it is not always the best option for everyone. Consult with your reverse mortgage lender to find out if you are a good candidate for it.
