Reverse Mortgages Get The Money You Need Part 2 Of 4

Reverse Mortgages - Get the​ Money you​ Need - Part 2 Of 4
To recap part 1,​ Reverse Mortgages are loans that allow you​ to​ borrow back the​ equity in​ your home .​
If you​ are 62 years of​ age or​ older,​ they are a​ way to​ borrow against the​ equity in​ your home to​ provide you​ with tax-free income .​
Probably a​ good idea if​ you're a​ senior who needs cash for medical care,​ to​ maintain your standard of​ living,​ or​ for other reasons.
So,​ what are some of​ the​ disadvantages of​ Reverse Mortgages?
- They are even more complicated than conventional mortgages and the​ consequences of​ various options might not be always up front.
- They may be relatively expensive compared to​ other alternatives.
- Although the​ money you​ receive is​ tax-free,​ it​ may affect your eligibility for need based public assistance benefits such as​ Medicare,​ Supplemental Social Security Income (SSI) and Medicaid/MediCal.
- Reduces the​ equity you​ have in​ the​ property which could cause a​ potential negative impact for your heirs.
- This source of​ funds is​ often not well understood,​ even by real estate and legal professionals .​
(Check out their experience before accepting their advice.)
In general,​ what types are available?
- FHA-insured mortgages - Home Equity Conversion Mortgage (HECM).
- Lender-insured.
- Uninsured.
Each type differs in​ the​ amount you​ can borrow,​ how the​ proceeds will be paid,​ and allowed expenses such as​ interest,​ closing costs and other fees.
Here are some things to​ think about before getting this financing :
-How much money do you​ need?
-Is there another way to​ get the​ money you​ need ?
-Will a​ Reverse Mortgage make you​ or​ your partner ineligible for any government benefits - now or​ in​ the​ future?
-Do I​ qualify for this kind of​ Mortgage?
-How much can you​ borrow ?
-How much will it​ cost you​ in​ fees and interest to​ borrow this money,​ even if​ you​ don't have any out-of-pocket expenses?
-Will you​ have to​ sell your house before you​ die to​ pay off the​ loan ?
-If you​ die,​ and your spouse is​ still living in​ the​ home,​ will he or​ she have to​ leave or​ pay it​ all off ?
-Will the​ loan become due and payable if​ you​ go to​ a​ long-term care or​ nursing home?
-What will your heirs or​ you​ have left after the​ loan is​ paid off?
-Are there any early-repayment penalties?
-What are your obligations,​ such as​ property maintenance,​ property taxes and insurance?
Seven important things to​ do before you​ make a​ decision :
1 .​
Decide how long you​ expect to​ stay in​ your home .​
These loans are relatively expensive for the​ first 2-3 years,​ so consider other options first.
2 .​
Consult with a​ HUD-approved Reverse Mortgage counselor before you​ apply .​
This information service is​ usually offered free of​ charge .​
a​ counselor can help you​ decide what kind of​ financial help you​ need and what type is​ best.
3 .​
Decide if​ you​ really need it .​
Another type of​ loan may be a​ less costly solution to​ meet your financial needs.
4 .​
You might want to​ Include your family,​ especially grown children,​ in​ the​ decision-making process .​
It's good to​ get a​ general agreement among your heirs that going ahead with this type of​ mortgage arrangement is​ okay with them .​
Remember,​ you​ may be reducing their inheritance.
5 .​
Shop around for the​ best deal .​
It may affect how much money you​ get immediately and in​ the​ long-term,​ how the​ money is​ paid out,​ how much you​ pay in​ interest and other charges,​ and so on.
6 .​
Determine if​ your Mortgage affects your eligibility for need based public assistance benefits you​ may receive.
7 .​
After you​ have considered all the​ facts,​ does getting a​ reverse mortgage make you​ happy ? If yes,​ that's a​ good sign .​
If you're not sure,​ best to​ examine all of​ the​ alternatives again.
That's all for this week .​
In Part 3 next week we'll talk about frequently asked questions concerning reverse mortgages - stay tuned !

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