In today's economy, many of the senior citizens who lost retirement funds in the stock market and are basically just getting by. However, there’s a way to get money out of their homes with a reverse mortgage. But there are pros and cons involved.
Reverse mortgages, they're good for some and not for others. But, if you meet the criteria favorable for this type of mortgage, it can work.
Essentially, a reverse mortgage allows you take out a mortgage on the equity of your home. The money is yours to keep with no repayment.
"It helps the people who cannot pay for medications, can't pay for repairs to the home, they might just be getting by,” said Myrtle Beach Mortgage Broker, Bill Blackburn of Atlantic Home Mortgage. “So here they have an asset they worked hard for all their lives, they've over 62 years old and they can access the equity"
Reverse mortgage payouts are either a lump sum, monthly payments, a home equity line or a combination of the three.
Mike Davis is an example of how a reverse mortgage can work out well. His saw his neighbors losing value in their homes and decided to cash out.
"The main reason I took a new mortgage out on my home, had to do with my age and the current state of the economy,” said Davis. “It didn't do a lot of good to have a house worth 2 or 300,000 dollars, paid for and not knowing where it's going to end up."
There are negatives. Reverse mortgages are expensive and if the mortgage holder dies, their heirs are responsible for the mortgage payback. The mortgages are basically no risk for lenders, the federal government insures them on the taxpayers' dime.
Mandatory workshops, however, explain the process is detail and qualify potential borrowers. According to a Consumer Reports investigation, reverse mortgages cost taxpayers more than 100 million dollars in defaulted mortgages since they started in 1993.
But if leaving money to your heirs isn't a priority, and you need the money now, it's worth investigating to see if you qualify. Check with a mortgage lender for more information.
Read the entire Consumer Reports article here:
http://www.consumerreports.org/cro/magazine-archive/september-2009/personal-finance/reverse-mortgages/overview/reverse-mortgages-ov.htm
Email
Facebook
Google
Twitter
Favorites
More
Advertisement