dangers of reverse mortgages

I was just asked if it is better to go to a broker or a lender to get a reverse mortgage. Generally speaking a lender will be the better bet because they have specialists who understand reverse mortgages. Since it is a relatively unknown product many brokers do not understand the processing of a reverse mortgage. If it is a HECM (FHA) reverse make sure your broker is FHA approved. With all the over site on these types of loans the fees and interest rates are watched carefully so a broker and lender will be the same. A lender will also service the reverse mortgage and will be a better contact down the road. If you have any specific questions please call me at 262-641-4450

David Forer

A. It’s absolutely false. The borrower retains title to the property. The reverse mortgage lender is merely extending a loan to the borrower.

Because the homeowners retain title, they remain responsible for the payment of property taxes, insurance, utilities, home maintenance, and other expenses — just as they would with a standard first mortgage or home equity loan.

A. There are many. Here are a few of the most significant:

* Remain independent. A reverse mortgage allows you to remain in your home and retain home ownership.
* Stay in your home. It allows you to remain in your home and retain home ownership.
* No monthly mortgage payments. You need not pay back the reverse mortgage loan nor make any monthly mortgage payments until you permanently move out of the home.
* Tax-free money. Because the money you receive from a reverse mortgage is not considered income, it is tax free* and will not affect your Social Security or Medicare benefits.
* Freedom and flexibility. The money you get from a reverse mortgage is yours to use in any way you choose.

* Consult Tax Advisor

Many seniors I talk with have some nervousness about the whole idea of reverse mortgages. The whole idea of taking out a mortgage on a free and clear house would make anyone nervous. Reverse mortgages are not always the best step for seniors to take. A reverse mortgage is a very peculiar mortgage that does have some drawbacks. I will explore a few of these.

A. Both a reverse mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash.

They differ in that with a home equity loan you must make regular monthly payments of principal and interest. However, with a reverse mortgage you do not make any monthly mortgage payments for as long as you stay in the home.

A. A reverse mortgage is a loan that enables senior homeowners, age 62 and older, to convert part of their home equity into tax-free* income—without having to sell their home, give up title to it, or make monthly mortgage payments. The loan only becomes due when the last borrower (s) permanently leaves the home.

* Consult Tax Advisor. Not all products available in all states.

The first post I do should give you a little history of reverse mortgages. Most people have just starting hearing of reverse mortgages and think they are a very new product. That is untrue. They have been around for a while but have not become popular till the government started regulating them. Here is a very brief and basic history of the reverse mortgage.