If you may have to move because of health or disability, a reverse mortgage is probably not prudent because, in the short term, your initial costs are unlikely to be paid. The high costs of reverse mortgages are not worth it for most people. It's better to sell your house and move somewhere cheaper, keeping the capital you have in your pocket rather than owing it to a reverse mortgage lender. It's a lot of money just to access the capital of your own home.
Reverse mortgages come with more regulations than a normal mortgage, so they represent some of the additional charges. If you watch TV, you've likely seen well-known voices like actor Tom Selleck promoting reverse mortgages as a valuable tool for any retired person. However, every financial product has two sides, so consider carefully the pros and cons of a reverse mortgage. Because loan funds can be spent as the borrower decides, a reverse mortgage can provide financial flexibility and freedom during retirement.
Sometimes it's hard to turn on the TV nowadays without seeing a reverse mortgage ad. And ask lots of questions to make sure that a reverse mortgage could work for you, and that you're getting the mortgage that's right for you. Sellers offering reverse mortgages are usually aging TV stars such as Henry Winkler, alias, the Fonze from “Happy Days”, Fred Thompson and Robert Wagner. For those prospective borrowers who plan to move within several years, there may be a worthwhile alternative, as reverse mortgages are designed to help people who plan to stay in their homes.
Reverse mortgages can be an expensive way to take advantage of your home's equity, so be sure to look for alternatives, such as a home equity loan. When used correctly, a reverse mortgage can also bring great peace of mind by adding additional income for a secure retirement. They are renters under reverse mortgage rules and have to leave when the older one does. According to Norma Paz Garcia, senior counsel for the United States Consumer Union, there is no standard of suitability for reverse mortgages for seniors.
Reverse mortgage lenders, by tapping into your reserve of nostalgia and goodwill, also expect you to take advantage of some of that good home equity you've accumulated over the years. As each month goes by, the homeowner with a reverse mortgage sees an increase in debt and a decrease in home equity. While a reverse mortgage may not work for your situation, don't lose hope that it's not your only option to make money or save money. One advantage of a reverse mortgage is that lenders usually don't have minimum income requirements or credit rating, which can help homeowners looking to cover their living expenses.
One of the advantages of a reverse mortgage is that lenders don't usually impose income or credit requirements. A reverse mortgage can be a valuable problem-solving tool for seniors who understand how these loans work and have a plan to use their net worth. Mortgage Equity Conversion Mortgages (HECM), the most common type of reverse mortgage, have a number of one-time charges and ongoing costs.