A Reverse Mortgage Can Provide Tremendous Financial Relief
Posted by @TopMortgageRate
Is a reverse mortgage right for you?
Our mortgage experts are often asked about reverse mortgages, many times by folks who are interested in finding an extra source of income, but may have some concerns, and would like some straight-forward information before inquiring further. We've put together the pros, cons and hows of this increasingly common financial product in one place to make the learning process a bit easier.
Basic Facts About Reverse Mortgages
As the name implies, a reverse mortgage is very much like a traditional mortgage, just in reverse. In a traditional mortgage, the bank hands over a large sum of money upfront so that the borrower can use it to buy a house. That borrower then pays it down over time by making monthly payments.
By contrast, with the most common forms of reverse mortgage, the borrower already has a house, which is usually all or mostly paid off. If they choose the monthly payment option, they receive fixed monthly payments from the bank that they can use on anything they like, and the amount owed to the bank grows over time as the borrower receives their monthly checks. The amount borrowed is only repaid in the event the borrower and their co-borrower(spouse) moves out of the home. This is a critical, and often misunderstood feature of these loans.
How To Determine If A Reverse Mortgage Is Right For You?
Like all financial products, reverse mortgages have pros and cons. Additionally, those who educate themselves can ensure that they maximize the pros while minimizing potential downsides. Here are some of the factors we recommend folks consider:
Additionally, if you do decide to start looking into loans, we recommend people secure multiple offers, then evaluate each of them along fairly typical lines:
What Are The Main Motivations For Those Who Do Get Reverse Mortgages?
LendingTree has connected thousands of people with reverse mortgage lenders, often helping them to get a significantly better offer than they would have gotten on their own, simply by forcing banks to compete against one another. Generally, of the thousands we've helped, those who opt for a reverse mortgage are looking to:
Disadvantages of Reverse Mortgages
Like any substantial financial decision, we strongly advise those considering a reverse mortgage to evaluate every angle, especially potential drawbacks. The most important things to consider are:
At the end of the day, the only way to really determine if a reverse mortgage is right for you is to get into the details of specific offers and to understand the available options. Even if it's just to arm yourself with more information, or to know what you could get should you ever need it, having the offers in your back-pocket can be a great source of financial peace.
Read entire article on: 11alive.com
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