During this time of economic upheaval reverse mortgages have become an attractive option to the elderly home-owning population. Through which the homeowner will receive money from lenders for their home equity for as long as they are alive or is still living in their home.
The right class of reverse mortgages can help a struggling senior maintain his or her standard of living while retaining ownership over the mortgaged property. However the disadvantages may outweigh the benefits especially in cases where in the senior does not fully understand the intricacies of reverse mortgage agreements. Great care and caution must be taken before going into an agreement by educating yourself on how does a reverse mortgage work.
In the best case scenario, seniors will not be subjected to any more financial stress due to entering into reverse mortgage agreement and even help them by mitigating and staggering costs to a manageable level.
However there are some reverse mortgage companies and institutions that may take advantage of the differences between conventional vs reverse mortgages and being aware of reverse mortgages pros and cons can help to avoid these pitfalls.
One disadvantage is the relatively higher cost of reverse mortgages over conventional loans. The rising debt nature of reverse mortgages means that they almost always tend to be more expensive than a conventional mortgage.
For example, when accepting a $300 per month payment in a reverse mortgage with 12 percent yearly interest …Read More