Interested in getting a reverse mortgage, but are unaware of what exactly you are getting into? There are a many different things to know when looking into a reverse mortgage and you need to know what before going to shop around for the best lender.
What is a reverse mortgage? Most targeted at senior citizens who are at least 62 years old at the time of the reverse mortgage.
The lenders are willing to give you a new reverse mortgage, with out paying figuring that at some time, you will move into an assisted living facility, or pass away at which time the lender will take over control of your home and usually sell it in order to recoup the money that was given to you.
There are 2 ways that money is made by the lender in this type of mortgage.
They will charge a fee at the time, generally between 2%-5% of the total loan amount, also, if the home appreciates in value, they make money there when they eventually sell the house.
For instance, if your home is worth $100,000, they will typically make between 2-5 thousand dollars, just off the loan fees.
If your home happens to appreciate in value, they will also get that worth when they sell the house in the future.
In the borrowers point of view, this is a great method to tap into your homes equity now, instead of waiting or selling the house.
You can take the cash from the reverse mortgage and raise your standard of living, take a vacation you have always wanted.
The average home only appreciates by about 3% or so yearly, while money in a retirement account, or in a mutual fund could be making you as much as 10% interest.
If your in need of money to help you retire, or live more comfortably, then know what a reverse mortgage is may be your best bet.
-M Petrone