Seniors! Listen! “Should seniors use Reverse Mortgages?” The answer is definitely no. Don’t be fooled into giving up your home equity.
There are advertisements everywhere trying to tempt seniors who own their home to apply for a reverse mortgage so they can take that cruise they’ve always wanted to take but didn’t have enough extra money to spend.
What’s The Catch To Reverse Mortgages For Seniors?
The truth is any senior living in their home that files for an application for a reverse mortgage will probably be successful. Did the loan officer from Fairway Independent Mortgage in Fort Collins go over all the details such as the interest that will be accruing from the time the money is disbursed?
Can The Money Be Spent On Anything?
The money can be spent for any purpose. The entire family could be taken on a tropical cruise if that’s what is wanted. The bank gives the impression that it is free money to be used any way desired.
Should Seniors Use Reverse Mortgages?
Even though the ads states that it is not a loan, just equity being given, the fact is that this is a loan using the equity you have in the home, you are still borrowing money from the bank. When the questions is asked “should seniors use reverse mortgages?, the answer from the bank is yes because it’s the equity you’re getting, not a loan. You are just using your equity in your home as the collateral. The difference is that there will not be any monthly payments for you to pay each month, but interest will still be accumulating. It turns out that a reverse mortgage is the most expensive loan available today. The fees that the senior has to pay up front alone are extremely high, maybe even close to 50 percent.
Home Maintenance and Repairs
When you get a reverse mortgage you have to agree to keep up the home. That means that if your roof needs to be repaired for $20,000 you would have to pay that. Where would that money come from? Out of the money you got on the Reverse Mortgage? Then you have to keep up the taxes. At some point, your reverse mortgage loan may have been for more than your home is actually worth.
Check Out Your Other Options Before Committing
It is so important for a senior to do some research before signing away their home. Make sure you know exactly what you’re getting yourself in to. Remember, you may need that equity for some medical or financial emergency so you don’t want to squander it away after it took you so long to build it up. You may want to have access to the reverse mortgage for a medical emergency. You could sell your home and put the money in a savings account and move into a small, more appropriate home. This way when you are really in need of extra cash you’ll have it you as a senior should be able to use your reverse mortgage.