You hear a lot about the benefits of having a reverse mortgage from the Maine 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 Maine 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 Maine legal advice before proceeding with a final decision.
Reverse Mortgage Calculator Aarp in Maine
The high expenses connected with reverse home loans seems to be one of the greatest arguments versus taking out a reverse mortgage, one must remember that the cost of selling a house, which may include significant repair works in addition to the realty commission and closing expenses, will often be higher than the expense of remaining in the home and getting a life time stream of income for as long as you stay in the home. Additionally, it should be kept in mind that the closing costs are not an out of pocket expense, the costs are funded into the loan, and not paid up until the loan is settled at the time the house owner completely leaves the home.
Educating yourself or a family member about a reverse mortgage is the only method to truly discover out if a reverse home mortgage is right for you or an enjoyed one. Every senior that wants to use for a reverse home loan must go through a no cost HUD counseling class to be sure that they entirely understand how the reverse home loan works and what other alternatives might be readily available to them.Reverse Mortgage Broker | Michigan Mortgage Lenders