Pros And Cons Of Reverse Mortgage Payment

Pros And Cons Of Reverse Mortgage Payment



Pros and Cons of​ Reverse Mortgage Payment
California Reverse Mortgage is​ a​ loan where the​ lender either pays you​ a​ lump sum at​ one go,​ makes regular monthly payments,​ extends a​ line of​ credit,​ or​ a​ combination of​ the​ three .​
You continue to​ own your home and pay property taxes,​ operating expenses and maintenance .​
But because you​ make no regular pay outs on​ the​ loan,​ the​ balance owed rises each month with the​ interest applied to​ it .​
In the​ event of​ your death,​ your heirs would be responsible for paying the​ total debt,​ which is​ often done by selling or​ refinancing the​ house .​
There are a​ number of​ pros and cons for the​ various California Reverse Mortgage Payment Options.
A.Line of​ Credit: This is​ when the​ access funds are at​ your discretion .​
The Pros and Cons of​ this type of​ California Reverse Mortgage payment are as​ follows
Pros: Flexibility - One of​ the​ Pros of​ this Reverse Mortgage Payment is​ that you​ can access funds anytime,​ whenever you​ need them.
Potential - Another Pro of​ this Reverse Mortgage Payment is​ its growth feature .​
The unused balance grows .​
This does not mean you​ are earning interest .​
The growth factor takes into consideration that your home has appreciated in​ value over the​ past 12 months and that you​ are one year older.
Extra Income - you​ can use your equity to​ supplement your retirement income .​
You can take a​ lump sum of​ cash and a​ monthly check .​
You can also take a​ monthly payment and have a​ line of​ credit you​ can write checks on​ as​ you​ need.
Cons: Spending lure - One of​ the​ Cons of​ this Reverse Mortgage Payment is​ that is​ that the​ funds can be easily exhausted.
Red tape - to​ access your funds,​ you​ must submit a​ written request to​ the​ loan servicer managing your account .​
It includes several rounds of​ official documents and meetings to​ get the​ amount approved.
B .​
Term: here you​ receive fixed monthly payments for a​ set period of​ time .​
The Pros and Cons of​ this type of​ California Reverse Mortgage payment are as​ follows:
Pros Instant transfer - Funds are instantly and automatically deposited to​ your bank account meeting your instant finance or​ emergency needs.
Regular money generated - you​ can receive large monthly advances helping in​ planning out your regular expenses.
Cons Fixed amount - the​ amount of​ funds you​ receive each month is​ fixed,​ so if​ you​ need additional funds,​ you​ will have to​ request a​ payment plan change which is​ a​ time consuming process.
A major disadvantage of​ this Reverse Mortgage Payment is​ that monthly advances are not indexed for inflation.
C .​
Tenure: here you​ receive fixed monthly payments for as​ long as​ you​ live in​ your home .​
The Pros and Cons of​ this California Reverse Mortgage Payment are as​ follows:
Pros
Worth it​ - the​ monthly advances continue for as​ long as​ you​ live in​ your home,​ even if​ the​ total amount you​ receive exceeds the​ value of​ your home .​
Despite this,​ you​ will never owe more than what your home is​ worth.
No money worry - you​ can keep receiving payments for as​ long as​ you​ live .​
Your spouse will keep receiving the​ payments if​ he or​ she is​ still alive .​
You never have to​ sell your home even if​ you​ outlive the​ equity .​
The income you​ receive is​ tax-free.
Cons the​ amount of​ funds you​ receive each month is​ fixed,​ so if​ you​ need additional funds,​ you​ will have to​ request a​ payment plan change.
You leave less equity for your children if​ you​ choose the​ wrong program.




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