If you are a home owner, aged 62 or older, with a good amount of equity you have the opportunity to use a reverse mortgage to solve a financial problem.
Many people don't have much of a choice. They have to go forward with the reverse mortgage. For others it takes some evaluating.
Those refinancing with the reverse mortgage can use funds in any manner they deem necessary. I find most are getting themselves out of their current mortgage to free up money. Others want to pay off debt or to supplement income.
It's pretty easy to see why the reverse is becoming so popular. Using this mortgage a borrower can solve their problem, not be forced to make payments to the bank, and never lose title to the home.
On top of that interest rates charged for the reverse mortgages are very competitive with their conventional mortgage counterparts.
As long as the program is explained properly the reverse mortgage is a very strong financial option. However, it is not without fault.
When comparing closing costs of forward and reverse mortgages you'll find reverse closing costs to be much higher.
You gotta wonder why this is the case.
Certainly one of the biggest culprits is that FHA charges mortgage insurance in the amount of 2% of the home's value. Other fees like the origination and title insurance are also based upon the home value.
Do some basic math and you can see how quickly the costs can add up.
When deciding upon going with a reverse mortgage these costs must be considered. It's not just the interest rate.
When meeting with a reverse mortgage lender you will receive a Total Annual Loan Cost analysis which will show you the cost of the mortgage on an annualized basis.
It will show you how much your loan costs in four future years.
As the loan ages it will become clear to you that the annualized cost goes down over time.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
Many people don't have much of a choice. They have to go forward with the reverse mortgage. For others it takes some evaluating.
Those refinancing with the reverse mortgage can use funds in any manner they deem necessary. I find most are getting themselves out of their current mortgage to free up money. Others want to pay off debt or to supplement income.
It's pretty easy to see why the reverse is becoming so popular. Using this mortgage a borrower can solve their problem, not be forced to make payments to the bank, and never lose title to the home.
On top of that interest rates charged for the reverse mortgages are very competitive with their conventional mortgage counterparts.
As long as the program is explained properly the reverse mortgage is a very strong financial option. However, it is not without fault.
When comparing closing costs of forward and reverse mortgages you'll find reverse closing costs to be much higher.
You gotta wonder why this is the case.
Certainly one of the biggest culprits is that FHA charges mortgage insurance in the amount of 2% of the home's value. Other fees like the origination and title insurance are also based upon the home value.
Do some basic math and you can see how quickly the costs can add up.
When deciding upon going with a reverse mortgage these costs must be considered. It's not just the interest rate.
When meeting with a reverse mortgage lender you will receive a Total Annual Loan Cost analysis which will show you the cost of the mortgage on an annualized basis.
It will show you how much your loan costs in four future years.
As the loan ages it will become clear to you that the annualized cost goes down over time.
This disclosure helps you determine, using the real facts, if you should proceed with this type of mortgage.
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