Reverse Mortgage Pitfalls
The Truth About Reverse Mortgage Pitfalls
The purpose of this article is to examine some of the reverse mortgage pitfalls. This type of mortgage is also known as the ‘lifetime mortgage’ and it allows an individual who is over 62 years of age to free up some of the equity that is tied up in their home. This extra money can be a great boon during a time when most seniors have more free time to enjoy life; it can be used to travel the world, buy that fancy car they always wanted, or just allow them to live well for a while. As well as all the benefits associated with freeing up this equity there is also the possibility of some negative consequences that could affect you or your loved ones after you die. Knowledge is power, and what follows is some advice so that you can avoid the most common reverse mortgage pitfalls.
The most important bit of advice in regards to reverse mortgage pitfalls is to shop around and gather as much information as possible. This is an important decision so it is not something you want to rush into only to regret later. You will also need a reverse mortgage calculator to allow you to work out how much you will be paying back; you can easily find one of these free on the internet. When you have gathered all the information you can then take some time to mull it over and choose the option that is best for you and your family.
The most attractive thing about a reverse mortgage is that the bank loans you money on the basis of turning your home equity into cash. This loan won’t need to be paid back until you have died or have sold your house; in most instances the interest and fees will also not need to be paid back until this time. Having this boost in cash can really be a life-changer and not needing to make repayments is the icing on the cake, but all that money will need to be paid back at sometime so as well. As well as being a great benefit this method of repayment can be one of the reverse mortgage pitfalls if you don’t know what you are doing. Another problem with this type of loan is the fact that you may very well find it difficult to get any other type of finance once you have this one.
The amount of money that will eventually need to be paid back will not only include the money borrowed, but also all fees and interest. The final amount that will need to be given back will depend on where you your reverse mortgage so this is why it is so important that you shop around; you want the lowest fees and the best interest rate you can possibly get. Always make sure that you fully read and understand any contract that you are going to sign if you want to avoid reverse mortgage pitfalls.
There are a lot of scams out there so you need to be careful to avoid what is one of the most common reverse mortgage pitfalls. Always get your loan for a reputable lender and be extremely cautious of those selling door to door, and other similar types of solicitation. Trust your instincts and fully research any lender that you are considering dealing with. Remember that this decision might not only affect you, but it could have a great impact on the life of your family after you die.
Above are just some of the possible reverse mortgage pitfalls. You will need to do a bit more research. If you are in anyway unsure about this loan you should not proceed until your concerns have been fully removed.