In almost all deals, negations, loans, mortgages, both ends should be at an advantage otherwise, it proves to be bad deal. Reverse mortgage are one of the deals that caters both ends: the lender and the borrower. A privilege entirely exclusive to seniors, aging 62 years and above, owning and occupying the house proving to have a high home equity by which the loan is tapped against.
The upside of reverse mortgage is that it allows a senior to acquire financial stability at the state where cash flow declines. With insurmountable expenses from bills, taxes and insurances to pay, how would a senior be able to catch up without a stable income? With age comes great advantage, the older one gets the bigger the amount he receives from reverse mortgages. Granting that he has huge mortgage to pay off, reverse mortgage allows him to acquire a huge amount of money to close existing mortgage deals. The money that he will be receiving from reverse mortgage either as a whole lump, in partial amounts or as a credit line, will be benefitted to the repairs of the house, taxes and home insurance.
There are downsides to reverse mortgages. While it proves to provide steady in flow of cash, one must know the terms before stepping into this undertaking. One of the most common disadvantages that seniors find in reverse mortgage is the fact that it interferes with one's eligibility to Medicaid. Another is that, it has a huge upfront cost that must be paid at the closing of the deal, that is when the last person listed in the deed of the house passes or when the occupants plan to move or sell the house. If your real estate properties is not in any way enough to pay off the closing costs, or if your heir refuses to pay for it, then the lender has no other choice but to sell the house. The overwhelming upfront cost is a one big pitfall of reverse mortgages.
In every negotiation, all is well as long as one understands the terms and predicaments. Without full-range knowledge on the pros and cons of reverse mortgages, stepping into such undertaking would be an ultimate blind attempt.
The upsides and downsides of reverse mortgages by Bryan Sam
