Try: Is a reverse mortgage right for you in general a reverse mortgage converts home equity into cash in several different ways these include monthly payments an equity line of credit a one-time payout or a combination of these options the amount a person can borrow depends on his her age the value of the home current interest rates and loan fees reverse mortgages have several advantages and disadvantages that are discussed below advantages of reverse mortgages allows the homeowner to stay in the home can pay off existing mortgages on the home simple to qualify for because no minimum credit score and generally no income requirements no monthly mortgage payments are due for as long as the homeowner lives in the home and meets requirements for maintenance and paying property taxes and insurance the homeowner receives payments on flexible terms can use as a credit line for emergencies can use to receive monthly cash payments can choose to receive a lump sum payment the total amount can choose to receive a combination of payouts a reverse mortgage can not get "upside down" so the heirs will never be required to pay back more than the home is sold for heirs inherit the home and keep any remaining equity after the balance of the reverse mortgage is paid off loan proceeds are not taxable the interest rate may be lower than traditional mortgages and home equity loans disadvantages of reverse mortgage the fees on a reverse mortgage are the same as a traditional fha mortgage but are higher than a conventional mortgage because of the insurance cost the largest costs are fha mortgage insurance origination fee the loan balance gets larger over time and the value of the estate inheritance may decrease over time the loan balance gets larger over time and the value of the estate inheritance may decrease over time although social security and medicare are not affected medicaid and other need-based government assistance can be affected if too much funds are withdrawn and not spent in one month the program is not well understood by most individuals however reverse mortgage counseling may help a person make a better decision about using a reverse mortgage information references adapted from carole moore 2009 "pros and cons of reverse mortgages " available at www bankrate com adapted from lisa dunn "reverse mortgages pros and cons "available at www caring com
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Categories: Sage, Topic, Financial
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Keywords: Reverse mortgage finances money home equity
*This information is listed as a Fact Sheet and is not explicitly medically licensed