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Is A Reverse Mortgage Right For You?
from:A reverse mortgage is the exact opposite of a traditional mortgage. Instead of you paying the bank to live in the house, the bank pays you to live in it. This may seem a bad deal for the bank, but there are a lot of reasons why a bank will allow a reverse mortgage. Typically a reverse mortgage is only approved for someone 62 or more years of age that has paid off his or her original mortgage. With all that equity in the home, the senior sitting in it might want to stay in the home but face additional expenses in medical or living costs that they can’t cover. Instead of selling the home and downsizing, they may choose to do a reverse mortgage with a bank instead thus allowing them to remain in the home.
How It Works
The reverse mortgage is a little more complex to close than a traditional mortgage. There are a number of different rules surrounding this type of mortgage loan. The age limit is one barrier and also the condition of the home may be another. The home has to be in good condition, free of major faults, before the bank considers doing this type of mortgage. Closing costs are significantly higher than the traditional loans and fees can also eat into equity. However, the upside is that you can get a disbursement of cash to help you pay immediate expenses while not having to vacate your home. This cash can come as a lump sum, a monthly payment, or even a credit line. The terms of the loan may differ with the bank involved and you should check to see what happens if you eventually sell the home instead of staying in it until you die.
The Potential Negatives
Seniors are targeted by unscrupulous lenders with predatory lending practices that can include a high fee reverse mortgage. Most lenders will be asked to undergo counseling before they take out a reverse mortgage, but that might not be enough to assess whether the mortgage is what you need at this point in your life. As always, if you aren’t certain of what you are signing, don’t sign. Instead, try to review the documents with someone who is knowledgeable and can answer any questions you might have about this type of mortgage. There are some downsides to a reverse mortgage. They can impact your ability to receive Medicaid benefits and government financial assistance. So, be sure to not only look at the terms of the mortgage but also check with your local government offices to see if the mortgage product might actually reduce your income instead of increasing it, due to the offset of benefits.
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Bankrate: Mortgage Rates Hold at Record Lows
NEW YORK, May 24, 2012 /PRNewswire/ -- Mortgage rates were little changed, remaining at record low levels. The average rate on the benchmark 30-year fixed mortgage rate was unchanged at the record low ...
Read more...Mortgage rates move lower
WASHINGTON, May 24 (UPI) -- Average mortgage rates for long-term, fixed-rate loans keep falling to record lows, the Federal Home Loan Mortgage Corp. said Thursday.
Read more...Historic Lows for Fixed Mortgage Rates Hold Steady
MCLEAN, Va., May 24, 2012 /PRNewswire/ -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey ® (PMMS ® ), showing the record lows for average fixed mortgage rates ...
Read more...Mortgage rates for May 24, 2012
I'm Greg McBride with Bankrate.com and here is your weekly look at mortgage rates. Mortgage rates were little changed this week, remaining at record low levels. The average rate on the benchmark 30-year fixed rate mortgage was unchanged at the record low of 3.97 percent.
Read more...Mortgage rates slide to record lows
Mortgage rates continue to drop well below 4 percent. The average rate for a 30 year fixed rate mortgage declined 2 basis points to 3.83 percent since last week, the lowest value on on record for this MBA series. The purchase application volume declined 3.0 percent and the refinance application increased 5.6 percent over the same period.
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