Just open your mailbox or flip on the TV. In your mail your getting tons of solicitations and on TV are recognized spokespeople talking about the reverse mortgage.
Even with all of this information being thrown at us most sixty two plusers can't give a rudimentary explanation of how a reverse mortgage works.
So here we are. Here to make this subject clear.
The reverse mortgage is no more than a mortgage on your home. A mortgage lender actually uses the equity you've built up in your home as security for the money they lend to you.
What I just described in the forward mortgage is really no different than the description of a reverse mortage. I want to be clear here in efforts of eliminating all odd ball notions of what it really is.
The point is these two mortgages are structurally similar, with just a few differences.
We get mortgages because we need the money for something? We have equity in the home either from a down payment or built up equity over time.
That loan could be to refinance a current forward mortgage, cash to pay bills and other life expenses, or perhaps to make investments.
The home's equity is essentially non-liquid money the owner of the property may use for his own purposes.
Why do people use a reverse mortgage? Because they can access this money and never be forced to make payments to the lender.
Of course that begs the question, "how does the mortgage company make money?" Now we're talking.
Reverse mortgages are true negative equity loans. That means since the borrower makes no interest payments the interest accumulates and accrues against the equity of the home.
Most times the mortgage lender is repaid its loan plus accumulated interest by the sale of the property. Either the borrower dies or the borrower sells voluntarily.
Important to note, because of all myths, is the borrower or it's family never loses ownership of the home during the mortgage.
With the ever increasing cost of life expenses and an ever not increasing income for so many seniors the reverse mortgage is gaining big popularity.
The downside is closing costs are higher than typical forward mortgages, which can make the reverse mortgage a poor choice in certain circumstances.
Even with all of this information being thrown at us most sixty two plusers can't give a rudimentary explanation of how a reverse mortgage works.
So here we are. Here to make this subject clear.
The reverse mortgage is no more than a mortgage on your home. A mortgage lender actually uses the equity you've built up in your home as security for the money they lend to you.
What I just described in the forward mortgage is really no different than the description of a reverse mortage. I want to be clear here in efforts of eliminating all odd ball notions of what it really is.
The point is these two mortgages are structurally similar, with just a few differences.
We get mortgages because we need the money for something? We have equity in the home either from a down payment or built up equity over time.
That loan could be to refinance a current forward mortgage, cash to pay bills and other life expenses, or perhaps to make investments.
The home's equity is essentially non-liquid money the owner of the property may use for his own purposes.
Why do people use a reverse mortgage? Because they can access this money and never be forced to make payments to the lender.
Of course that begs the question, "how does the mortgage company make money?" Now we're talking.
Reverse mortgages are true negative equity loans. That means since the borrower makes no interest payments the interest accumulates and accrues against the equity of the home.
Most times the mortgage lender is repaid its loan plus accumulated interest by the sale of the property. Either the borrower dies or the borrower sells voluntarily.
Important to note, because of all myths, is the borrower or it's family never loses ownership of the home during the mortgage.
With the ever increasing cost of life expenses and an ever not increasing income for so many seniors the reverse mortgage is gaining big popularity.
The downside is closing costs are higher than typical forward mortgages, which can make the reverse mortgage a poor choice in certain circumstances.
No comments:
Post a Comment