What’s your opinion of “reverse mortgages”? What are the disadvantages of a reverse mortgage?
Scarlett
For an older person who has a lot of equity in the home but needs monthly cash to make ends meet (or go on that vacation that they never took), reverse mortgages can be great.
It’s like any mortgage, though…you have to shop around, you have to deal only with reputable companies, and you have to ensure that you understand ALL of the terms and fees and interest rate, etc.
I’ve read that reverse mortgages can cost a little more than a traditional mortgage, but it’s a different kind of product with a different kind of risk (for the lender), so it makes sense to me the cost should be just a little higher.
If you or a family member is considering a reverse mortgage but you’re just not sure about what you’re getting into, ask a trusted family friend or professional–someone who knows their way around numbers–to watch over the process.
I think they are great for people on a fixed income, whose property taxes are rising, and have their homes paid off (or a lot of equity).
You have to be a minimum of 62 years old to get a reverse mortgage.
They are structured so that you cannot get more for the house than it is worth, so there should be no possibility of being upside down.
Disadvantage is that should you want to pass your home down after you die, there would not be much equity left in it.
It is my understanding that you MUST be very cautious of excessive upfront/garbage fees…
Keith