Consumer Blog
Reverse mortgage - is it right for me (or my parent)?
You may have heard of this product - relatively new - designed to provide spending money based on home equity. Seniors over 62 are generally eligible for a reverse mortgage.
Here's how it differs from a home-equity loan:
With a home-equity loan, you get a lump sum up front, and you pay it back monthly, like any other loan. With a reverse mortgage, you get either a lump sum, or you can get paid monthly. Then you don't have to pay it back until you die or move. You may be wondering, how do I pay it back if I die? The answer is, it comes out of the sale of your house, or it reduces the value of your estate. So if you plan to leave money or property to your heirs, take that into consideration. That effect on the estate is one of the downsides. The other is much higher fees and closing costs.
Bankrate.com has a nice Reverse Mortgage 101. And USA Today covered the topic recently with stories from people who took out or considered reverse mortgages. To determine if this is right for you, talk to your financial advisor. There are also scams out there. The Florida Attorney General put out this warning recently.
Technorati Tags: home equity, mortgage, reverse mortgage, senior, moagoconsumer, consumer protection
Posted by on January 22, 2008 6:24 pm :: Comments (4) :: Permalink
4 Responses to "Reverse mortgage - is it right for me (or my parent)?"
says:
February 12, 2008 5:01 pm
When I looked into a RM a couple ofyears ago, the closing costs were high - a total of almost 17% :0
So just a word of caution might be a good addition to the blog. You don't get all the money from the house. Costs are deducted, and they can be considerable.
says:
April 29, 2008 2:15 am
Great read. I think I'll subscribe to this as it has some good info! Thanks. I do apppreciate the blog :-)
says:
May 2, 2008 7:29 am
Great read. I think I'll subscribe to this as it has some good info! Thanks. I do apppreciate the blog :-)
says:
June 27, 2008 10:00 pm
17% in closing cost fees. That is a lot. I guess there will be a crackdown on reverse mortgages soon with companies using unlicensed loan officers. Seriously, 17% in fees is like getting a hard money loan. It could very well be that the 17% was a falt fee and the person was getting a small loan so it can be relative. I'd get a referral and defintiely a state licensed loan officer or mortgage lender.
