9/15/2007 3:24 PM
BE VERY CAREFUL.
Five Reasons You Should Think Twice Before Getting a Reverse Mortgage:
- A reverse of a mortgage loan is secured by a house, but unlike a conventional mortgage that decreases over time, a reverse mortgage increases over time.
- Reverse mortgages are designed for older buildings that have a home with equity, and they want to unlock equity and turn it into money so they can use it for other purposes such as home repairs or to pay off other debts.
- With a reverse mortgage the property borrows money, but has no obligation to repay, from living in your home, so it can be used as a way of consolidating debt.
- Each months interest is added to the principal amount of the loan, and when the property moves, they want to repay the loan, or the house is sold and the proceeds will revert to the mortgage lender.
While a reverse mortgage may be a good idea for some people, here are five reasons a reverse mortgage may not be a good idea for debt consolidation loan:
- First, reverse mortgages are much more expensive than traditional mortgages, Traditional form of a mortgage may be a better method of consolidating debt.
- Second, reverse mortgages are a form of debt, many elderly people want to avoid debts, especially as the age, so repayment of the debt may be a better option than debt consolidation.
- Third, reverse mortgages must be paid off by the death of the property, or if the borrower has not lived at home for 12 months. This could be a problem if the borrower is placed in a home, and then recovers, only to find the house sold.
- Fourth, while the regular Social Security and Medicare benefits are not made, other programs such as Medicaid and Supplemental Security Income (SSI) may be affected.
- Finally, there are significant costs up front, so reverse mortgage is usually only a good idea for people who want to live in their homes at least, five years