CONS of a reverse mortgage The loan balance increases over time as interest on the loan and fees accumulate. As home equity is used, fewer assets are available to leave to your heirs. You can still leave the home to your heirs, but they will have to repay the loan balance.
A reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The loans are typically promoted to older homeowners and typically do not require monthly mortgage payments. borrowers are still responsible for property taxes and homeowner’s insurance.Reverse mortgages allow elders to access the home.
· One question that frequently arises – and is a subject of misconceptions – is what happens to a house after a reverse mortgage (Home Equity Conversion Mortgage) ends. Some people believe the bank automatically owns the house, but that isn’t necessarily the case.
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Pros of Reverse Mortgages. Allows the homeowner to stay in the home. 1 Can pay off existing mortgages on the home. No monthly mortgage payments are required, however the homeowner must live in the home as their primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements.
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If you are unsure about whether a longer term mortgage is right for you, it’s probably best to speak to a broker. They will.
Reverse Mortgage Pros and Cons. We’ve all seen the commercials about reverse mortgages but may still be unsure of they’re the right choice. A reverse mortgage is a home loan for qualified borrowers age 62 typically with substantial equity in their home.
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cons Value of your estate inheritance will decrease over time as reverse mortgage proceeds are spent and the interest compounds on your loan balance. The bottom line is you are spending a portion of your children’s inheritance on yourself. Are you OK with that?