Are you wondering whether to get a reverse mortgage or not? The Consumer Financial Protection Bureau has issued a study about the dangers of reverse mortgages. The study has shown that many elderly homeowners are being fed false information about how reverse mortgages work that can really hurt them in the long run.
The study showed that the homeowners often don’t realize that the reverse mortgage is a loan that has to be paid back, and aren’t being informed on their responsibilities. “Incomplete and inaccurate” information from lenders, including fine print on the TV ads or web sites, is misleading them.
The study showed that some owners “thought that because the money they received through a reverse mortgage represented home equity they had accrued over time, there was no reason they would have to pay it back.” They also were led to believe that “having a reverse mortgage meant they could never lose their home.” The fine print is where some lenders are hiding the truth, that reverse mortgage holders are still required to pay property taxes, homeowner’s insurance and maintenance, and failure to do so can lead to foreclosure. These ads often use celebrities as pitchmen, lending them an air of credibility.
We warned about the dangers of a reverse mortgage before, and this study really validates our previous misgivings about them. A reverse mortgage in and of itself isn’t evil, but you need to understand what they are before you get yourself into one. A Reverse Mortgage is a loan that doesn’t require you to make any payments on your home until after your death, as long as you keep the home. If EVERYONE on the lease is at least 62 years old, you can take out a mortgage against what you owe. If you only owe $20,000 on the home, you may want to take out $120,000. This will apply $20,000 toward the original mortgage, and net you $100,000 for your retirement. As you can see, these are ineffective if you still owe quite a bit on the house.
You’re much better off using a cash out refinance to help finance your retirement.This loan lets you make payments as you go, allowing you to keep your home in the family for years to come by not passing on the debt to your children. A cash-out refinance lets you borrow against your home much like a reverse mortgage, but doesn’t force the stiff requirements on you to maintain your home and insurance payments, lest you suffer a balloon payment. With interest rates so low, it’s a great time to refinance your home to put some retirement funds in your pocket. Call us in Indianapolis today at (317) 550-1515 or visit www.thehomeloanexpert.com to apply online. Nobody makes it easier in Indianapolis to refinance your home.