Reverse Mortgage Pitfalls:
Information You Must Know!
Reverse
mortgage pitfalls occur nearly everyday. Are you
considering such a loan and if you are have you thought about
the negative aspects of such a loan?
Unless God forgot your eyes and ears at birth, you have
undoubtedly seen all the ads everywhere from your television set
to your local newspaper.
These types of loan can fit will for many people as I am sure
they do in certain circumstances but there are many caveats that
you must be aware of and pay close attention to if you are
considering a reverse type of loan.
There are well over a dozen types of reverse type loan concepts
floating around out there at the time of this writing.
Your first plan of action should be to seek out only those
lenders who are offering a large selection of these types of
loans for you to consider.
If the lender you talk to only offers you a couple of different
types of loan packages you need to be very wary as these types
of loans are probably designed by the lender themselves and may
not offer you the best rates and terms you can find shopping
around.
Reverse mortgage pitfalls can be completely avoided by arming
yourself will all the facts before you go shopping for one of
these loans.
Reverse mortgage loans are usually structured around a couple
basic requirements. The first and foremost is your age. HUD for
instance requires you to be 62 while the more conventional
market will make loans to younger groups.
The major pitfall here is that the younger your age when the
loan is made, the less interest you will be offered on that
loan. This can have major consequences for you down the road.
The inflation factor. It will never go away so as the cost of
living expenses grow year after year will your loan payment
increase as well?
Your reverse mortgage contract must include some sort of cost of
living adjustment. If it doesn't where do you think your income
will put you 10 years from now?
Another very serious reverse mortgage pitfall may come in the
form of property taxes. Yes, you the home owner must pay these
year after year. Have you figured those into your income
calculations a decade from now?
Keeping up your property. Yes, the lenders will require this.
Expenses such as roofing, heating, air conditioning, plumbing
and on and on will pop up from time to time and you need to
factor in these costs over the years as well.
Your home owners insurance payments. Your lender will require
that you keep up to date insurance on your property as they need
to protect their investment. Have you included those costs into
your future income forecast?
Lastly but far from least in your current utility costs. How
much to you think you will be paying 10 years from now. They
will continue to increase as previously mention in the inflation
factor I discussed earlier.
So what is the bottom line on these types of loans? Well, these
are but a few of the many you should take into consideration and
discuss with your lender. There are more which you can discover
online if you know where to look.
Add up all your expenses you will pay over the next decade and
make sure these factors are included in any type of loan
contract you agree to. The buying power you have today should be
the same buying power you have 10 or 15 years down the road.
Reverse mortgage pitfalls? Yes but certainly not always.
Depending on how you structure you loan it could work out
beautifully for you in the end. It all depends on how much
knowledge you are bringing to the table and remember that
knowledge equals power and only you decide how much power you
will bring to that table!
