Colli Real Estate

Reverse Mortgages – Get the cash you need – Part 2 of 4

To summarize Part 1, Reverse Mortgages are loans that allow you to borrow back the equity in your home. If you are 62 years of age or older, they are a way to borrow on the equity in your home to ensure an income tax free. Probably a good idea if you're a senior who needs cash for medical care, to maintain your standard of living, or for other reasons.

So what are some disadvantages of mortgages reversed?

– They are even more complicated than conventional mortgages and the consequences of different options may not always be front.

– They can be relatively expensive compared to other solutions.

– Even if the money you receive is tax exempt, this may affect your eligibility for "need based" public assistance benefits such as Medicare, Supplemental Social Security Income (SSI) and Medicaid / Medical.

– Reduces the equity in the property that could have a negative impact potential of your heirs.

– This source of funding is often misunderstood, even by real estate and legal professionals. (Check their experience before accepting their advice.)

In general, what types are available?

– FHA Insured Mortgage Loans – Home Equity Conversion Mortgage (HECM).
– Lender insured.
– Not sure.

Each type differs in the amount you can borrow, how whose proceeds will be paid and allowed expenses such as interest, closing costs and other expenses.

Some things to consider before you get this funding:

-How much money do you need?
-Is there another way to get the money you need?
-Is a reverse mortgage do you or your partner qualify for any government benefits – Now or in future?
"I do not qualify for this type of mortgage?
-How much can you borrow?
-How much will this cost in interest costs and borrowing money, even if you do not have all the costs out of their pocket?
-Do you sell your home die before repaying the loan?
-If you die, your spouse and still lives in the house, will she leave or pay for everything?
-Is the loan becomes due and payable if you go to one of long-term care or nursing home?
-What will your heirs or if you have to left after the loan is repaid?
-Are there early repayment penalties?
-What are your obligations, such as property maintenance, property taxes and insurance?

Seven things important to do before making a decision:

1. Decide how long you intend to stay in your home. These loans are relatively expensive for the first 2-3 years, then consider other options first.

2. Consult a HUD approved reverse mortgage counselor before applying. This information service is usually free. A counselor can help you decide what type of financial assistance you need and what is the best type.

3. Decide whether you really need. Another type of loan may be a cheaper solution to meet your financial needs.

4. You can include your family, especially adult children, in decision making. It is good to get a general agreement among your heirs is moving forward with this type of arrangement is acceptable mortgage with them. Remember, you may be reducing their inheritance.

5. Shop around for the best deal. It can affect how much money you get immediate and long term, how the money is paid, how much you pay interest and other charges, and so on.

6. Determine if your mortgage affects your eligibility for "need based" public assistance benefits you may receive.

7. After considering all the facts, not get a reverse mortgage make you happy? If yes, this is a good sign. If you not sure, best to consider all the alternatives again.

That's all for this week. In Part 3 next week, we will discuss issues concerning frequently asked questions about reverse mortgages – so stay tuned!

About the Author

Ken Black is the founder of Debt Relief Today. Visit www.debt-relief-today.com for information on debt consolidation and how to refinance.

Equity Key: Reverse Mortgage Alternative. Contact Shary or Mary at 1-888-248-7650

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