If you have trouble managing your money, a reverse mortgage won’t solve your financial problems.<\/strong><\/p>\nFor some folks, getting their hands on a large sum of cash may result in poor spending choices that could leave them without enough money for basic living expenses later on. Who hasn’t heard horror stories of retirees blowing reverse mortgage money in record time on expensive vacations, meals, cars, and other frivolous purchases? Anyone who really has a problem with debt and managing money may need to speak with a credit counselor.<\/p>\n
Credit counseling differs from reverse mortgage counseling, which is mandatory for most reverse loans. This free or low-cost counseling can be done in person or by phone. The goal of counseling is to get detailed reverse mortgage information to help you decide if using one of these loans is a wise choice. Counseling can help you review other alternatives to getting a reverse loan. Find a HUD-approved counselor to talk through your options. Seniors who use reverse mortgages can reap a lot of benefits, but these loans aren’t for everyone.<\/p>\n
Your home appraisal<\/strong><\/em>
\nYou may not benefit much from a reverse loan if you don’t have enough home equity. When you apply for a reverse mortgage, your home will be appraised to determine its current market value. The more equity you have in your home, the more money you can potentially receive through a reverse mortgage. After the past year’s market performance, it’s worth noting that no matter what happens with the housing market, the amount owed on a reverse mortgage never exceeds its market value at the time a house is sold.<\/p>\nJust make sure you really want to cash out that home equity.<\/strong> When you own a home free and clear, you can leave it to your heirs without too many restrictions in most cases. But with a reverse mortgage, one of the disadvantages is that if you want your heirs to have the home, they (or your estate) must pay off the loan balance first. They also could choose to sell the home and keep any remaining equity after repaying the lender. If they don’t want the home, they can do nothing and the mortgage lender takes the property.<\/p>\nReverse mortgage disadvantages: Loan fees<\/strong><\/em>
\nReverse mortgages usually have a lot of upfront costs, so you may want to consider other alternatives to getting more funds if you plan to move from your home in a few years. Some other ways to improve your cash flow are to redo your budget to reduce expenses, get a home equity loan or no-interest loan from a local government agency or nonprofit, or look for grants for homeowners in your area.<\/p>\nOne thing to remember is that the US Department of Housing and Urban Development’s Home Equity Conversion Mortgage (HECM) allows you to use the proceeds from to buy another home as your primary residence. So you can use the money from a reverse mortgage to downsize to a less expensive place.<\/p>\n
Get the reverse mortgage facts to help you decide<\/strong><\/em>
\nAs more seniors have struggled to make ends meet in recent years, reverse mortgages have grown in popularity. Some consumer advocates and legislators say reverse home loans are heading for another meltdown like subprime mortgage loans. Others believe that these loans have a lot of value and can help seniors live more comfortably in their golden years.<\/p>\nIt’s up to you to make the right decision based on your personal financial situation. And don’t let pushy salespeople pressure you into signing up for a reverse mortgage without understanding all the consequences.<\/strong> Talk to a counselor to discuss reverse mortgage facts and whether one makes sense for your needs.<\/p>\nJ.D.’s note:<\/strong> I know absolutely nothing about reverse mortgages. In fact, before doing research for my book, I had vaguely negative feelings about them. But lots of financial experts I trust think they’re a good option \u2014 in some cases. Do YOU know anyone who’s taken out a reverse mortgage?<\/strong> Are they glad they did? Or do they wish they hadn’t?<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"Whether through recent news articles or over the water cooler, you’ve probably heard something about reverse mortgages. But if you (or a loved one) is considering this type of loan, don’t base your opinion on hearsay. For such a major financial decision, it’s worth getting the facts about reverse mortgages. This type of mortgage can actually be a valuable option for people in the right circumstances and who understand the terms of the deal.<\/p>\n
Reverse mortgages convert home-equity into cash<\/strong><\/em>
\nWhat is a reverse mortgage? If you own a home and are 62 or older, a reverse mortgage is a way to convert some of your home equity into cash. Rather than make monthly payments to your lender, your lender is making payments to you<\/em>. The money you borrow through a reverse mortgage is paid back, with interest, when you move out of your home, sell your home, or die.<\/p>\nThe older you are and the more valuable your home, the lower the interest rate you can get in a reverse mortgage \u2014 meaning you can borrow more money.<\/\n<\/p>\n","protected":false},"author":3385,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[484,493],"acf":[],"_links":{"self":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/8000"}],"collection":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/users\/3385"}],"replies":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/comments?post=8000"}],"version-history":[{"count":0,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/8000\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/media?parent=8000"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/categories?post=8000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}