Reverse Mortgages: Read the Fine Print
April 20, 2023
A reverse mortgage is a type of mortgage that allows homeowners to borrow against the accrued equity in their homes. The loan is paid back when the loan borrower moves or dies. There are advertisements for reverse mortgages all over the television, radio, and on the internet. However, some of these advertisements make incomplete or inaccurate statements. This is not a risk-free loan.
Older homeowners were surveyed about their impressions of reverse mortgage ads. Many believed that these loans did not have to be repaid. Others believed that the federal government provided the money. Some believed that they could access the equity in their homes interest-free. Many ads say that you can live in your home as long as you want and you still own your home. The ads neglected to mention that seniors could lose their homes if they don’t satisfy all the loan requirements.
With more Americans living longer, it is possible that reverse mortgage borrowers may outlive their loans, so borrowing without careful consideration of the pros and cons of a reverse mortgage is not a good idea.
A Reverse Mortgage is a Home Loan
A reverse mortgage is a home loan. It is not a government benefit. Reverse mortgages have the same fees and interest structure as other loans and must be repaid just like any other mortgage loan. U.S. federal insurance guarantees that borrowers will receive their loan funds even if their lender is experiencing financial difficulties or the balance of their loan exceeds the value of their home.
You Can Lose Your Home with a Reverse Mortgage
You can keep ownership of your home and live there as long as you want only if you comply with all the terms of the reverse mortgage loan. If you do not pay your taxes, or your homeowners’ insurance, or leave your home empty for more than six months, you may be considered in default on your loan. Your home can be foreclosed upon when this occurs. The best thing to do if you are considering a reverse mortgage is to speak with a mortgage specialist like the ones at Superior MCI.
What Happens if you Outlive Your Loan Proceeds?
A reverse mortgage does not guarantee your financial security no matter how long you live. Currently, people are living much longer lives than they were twenty years ago. Having short-range and long-range goals for living after retirement should be your motivation. In this way, if you want to access some of your home equity, you will wait for the right time so you won’t run out of retirement resources as you grow older.
Superior Mortgage Co., Inc. can advise you about the best mortgage loan option for you. We understand how important these decisions are and offer residential and commercial loans as well as a wide range of products and services to give you the best options for your mortgage loan. Call Superior Mortgage Co., Inc. at 845-883-8200 or email [email protected] for additional information.