You hear a lot about the benefits of having a reverse mortgage from the Florida lenders trying to sell you a product. But what are the disadvantages of a reverse mortgage? Here we look at some of the pitfalls to be aware before taking out this type of financial product.
The first thing to realize is that there will be less equity in your home when it is time for you to sell it or move out. In fact, you have to be prepared for the fact that there may be no equity at all. The good news is that the amount that you owe in repayment of a reverse mortgage can never exceed the value or sale price of your home.
This reduction in equity may not be a big issue for you if you have no children. But say you have always wanted to give your kids a helping hand by passing on your home to them. This may not be possible if the equity is very low. The property may need to be sold to repay the Florida mortgage.
The next disadvantage is that the costs involved with a reverse mortgage can be very high. This applies to both the interest rate and associated fees. These fees can sometimes be added to the loan so that you do not need to find any cash upfront. But remember that this will further eat into the equity of your home.
Remember that a reverse mortgage can only be used on the property that you live in. It is not available for any rental or investment property that you may have.
Although many people find them a great financial help, there are also disadvantages to a reverse mortgage. You may want to speak to a housing counselor or get Florida legal advice before proceeding with a final decision.
The Truth About Reverse Mortgages in Florida
The high costs connected with reverse mortgages seems to be one of the most significant arguments against securing a reverse mortgage, one should remember that the cost of offering a house, which may include significant repair works in addition to the realty commission and closing expenses, will nearly always be higher than the cost of remaining in the home and acquiring a life time stream of income for as long as you stay in the home. Additionally, it ought to be noted that the closing expenses are not an out of pocket expenditure, the costs are funded into the loan, and not paid until the loan is paid off at the time the property owner completely leaves the house.
Informing yourself or a household member about a reverse home mortgage is the only method to truly discover out if a reverse mortgage is best for you or a loved one. Every senior that wants to apply for a reverse mortgage must go through a no cost HUD counseling class to be sure that they entirely comprehend how the reverse mortgage works and exactly what other alternatives might be available to them.Reverse Mortgage Broker | Chase Reverse Mortgage