To get the full list of the pros and cons of reverse mortgages a borrower must meet the counselor and ask all the personal questions and the special rules from his state. Only then he is ready to decide, is it useful to take this loan type.
However, the reverse loan is a serious move and a senior must be sure, that he or she understands all the details. Because there is no monthly payments it may feel as if the money is free and their will never be back payments. On the contrary. The reverse loan is a long term commitment, like a usual mortgage.
1. More Disposable and Tax Free Income.
The main benefit is, that this loan arranges to a senior more disposable cash money. If a borrower has an usual mortgage left, he has to pay it away with the reverse loan. This will mean more money to use. The extra money will be loaned against the equity of the home, but the borrower remains as an owner and will enjoy about the home price increases.
2. The Obligatory Mortgage Insurance.
There will be two guarantees, the equity of the home plus the mortgage insurance. The insurance is obligatory and will be used, if the home value will not cover the whole amount of the capital, interests and the costs. A borrower will never use his other assets to cover the reverse loan costs.
3. Altogether 3 Borrowers Are Accepted.
3 borrowers are really accepted but all must meet the qualifications, i.e. to be age 62 or over, the home owners and live permanently in the home. This is very good for the seniors, because now they can help each other and share a bigger home.
4. The Costs.
The biggest argument against the reverse loan is the cost structure. We can say generally, that these loans are more costly than the usual mortgages owing to the higher upfront costs. However a senior must compare the benefits with the costs and to think, how necessary the extra money is for him.
5. The Influence On The Medicaid or Other State or Federal Programs.
The rules concerning the reverse mortgages, Medicaid and other social supports differ from state to state. That is the reason, why you should ask very detailed, what and how you are allowed to do to keep your eligibility to the ideal set of the social support. It may require some special arrangement and if they fit to you, just do them.
The most useful source of information is the federal counselor, because his job is to guide the seniors to reach the best solutions for them. To get the top benefits from the counselor meeting, it is wise to make a list of questions, discuss with other seniors, surf in the Net and to think.
About the Author:Juhani Tontti, B.Sc., Marketing. For more information about pros and cons of reverse mortgages and about the HUD reverse mortgages, please visit: reverse mortgages how they work
