Reverse Mortgage Pitfalls: Truth Or Dare?
by: BarryCrewse |
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Reverse mortgage pitfalls. It should be a statement that everyone one should contemplate when considering taking such a loan.
Unless God forgot your eyes and ears at birth, you have undoubtedly seen all the ads everywhere from your television set to your local newspaper.
Although this type of loan may fit well for many people, and I am sure that it does, there are many caveats that you need to be aware of and pay close attention to when seriously entertaining a reverse mortgage loan.
There are well over a dozen types of reverse type loan concepts floating around out there at the time of this writing.
Your first plan of action should be to seek out only those lenders who are offering a large selection of these types of loans for you to consider.
Be very wary of lenders who will only offer you two or three choices as most likely these are in house packages that are self centered with your lender and may not offer you the best terms that you will find with lenders offering you a bigger selection of loan packages.
Once you arm yourself with the facts before you go shopping, reverse mortgage pitfalls need not even occur.
These loans are structured around basic requirements which start with your age. For instance HUD requires you to be 62 years of age while more conventional lenders will offer you a loan at younger ages.
The pitfall here is that the younger you are the less attractive interest rate you will get which can really hurt you down the road.
Inflation! This ugly fact will never go away. As the cost of living increases year after year will your loan payment increase as well?
You should stipulate in your contract that cost of living be adjusted accordingly or you could find yourself in real trouble 10 years down the road.
Another reverse mortgage pitfall factor that you must pay close attention to is your yearly taxes. These must be payed by you, the home owner. Have you figured those costs into your income levels 10 years down the road from now?
Property upkeep. Yet another expense factor you must not ignore! Expenses such as your plumbing costs, HVAC, roofing, flooring and a tons of other things that pop up from time to time. You must include those costs as well.
Your home owners insurance payments. Your lender will require that you keep up to date insurance on your property as they need to protect their investment. Have you included those costs into your future income forecast?
Finally, you must continue to pay for all the related utility costs to the property. As with the inflation factor previously mentioned, what do you think you will be paying for electricity 10 years from now?
The bottom line? These are just a few of the things you need to consider and talk over with your lender. There are more and you will find these online if you know where to look.
Take all your cost you expect to pay over the next 10 to 15 years and make sure the contract you agree to will adjust upwards as these costs increase. The power of your dollar today should have the same power 10 years from now.
Reverse mortgage pitfalls? Maybe yes, maybe no. It all depends on how you structure you loan and the knowledge you have about it when that loan is created. Keep in mind that knowledge is power and only you decided how much power you will take to the table!
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If you might be contemplating a reverse mortgage and would like to find out more about Reverse Mortgage Pittfalls Swing by our site at My Mortgage Interest Calculator get all the latest information regarding your loan questions.
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