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Reverse Mortgage Loan Information

A reverse mortgage is a mortgage loan or lien against your home that you do not have to pay back for as long as you live there. It’s similar to a home equity loan in the fact that you are taking equity out of your home in the form of cash. You can get the cash out from a reverse mortgage in several different ways:

• a single lump sum of cash paid at closing;
• a regular monthly payment made to you in the form of a cash advance;
• A credit line somewhat like a HELOC;
• Or a combination of any or all of these;

Pros of a Reverse Mortgage

• No Credit Check;
• No income needed;
• Can’t lose your home because you miss payments;
• You never have to repay the loan;

Cons of a Reverse Mortgage

• Create debt against your home and decreased equity in your home;
• Additional fees on top of normal closing costs;
• You have to completely own your home;
• You have to be at least 62 years of age to do this;

When should you consider a reverse mortgage? If you are not facing a financial emergency now, then consider postponing a reverse mortgage. Reverse mortgages are a very expensive way to get cash. Most lenders tack on additional fees on top of normal closing costs. The fees can be as much as 4% of the loan on top of normal closing costs.

Before you decide to opt for a reverse mortgage make sure you understand all the details. Do your homework and make sure you understand exactly what you are doing.