Understanding And Selecting Reverse Mortgages - part 2

by Bob Hartz

One of the primary differences between an HECM or private reverse mortgage and a refinance loan is that reverse mortgage loan advances are not taxable and generally do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence.

Some of the facts to keep in mind about these loans: . Lenders not only charge origination fees and other closing costs for a reverse mortgage but may also charge servicing fees during the term of the mortgage. . The amount you owe on a reverse mortgage generally grows over time. Interest is usually a variable rate and is charged on the outstanding balance and added to the amount you owe each month. . Reverse mortgages can use up all or some of the equity in your home, leaving fewer assets for you and your heirs. . Because you retain title to your home, you remain responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. . Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.

There are enough pitfalls in reverse mortgages that in the case of an HECM, HUD requires that you meet with a counselor from an independent government-approved housing counseling agency. The counselor must explain the loan's costs, financial implications, and alternatives. This is a tremendous resource. Shop the loan market all you want, but take what you find to a counselor who can walk you through all your options and compare them, side by side.

Copyright (c) Bob Hartz

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Related Reverse Mortgage Articles: Reverse Mortgages And Government Benefits Reverse mortgages are increasing in popularity as a way to turn home equity into a liquid asset. Before you jump on a reverse mortgage, you need to understand the impact it can have on government benefits. Reverse Mortgage - Be Sure You Need It Before Applying For One Reverse mortgages are useful tools for those who need extra cash during their retirement years. Be aware that there are costs associated with them and that they may not be right for you. What Is A Reverse Mortgage? What is a reverse mortgage? Refinancing A Reverse Mortgage The reverse mortgage is primarily a resource for our senior population, and it has become a widely used financial instrument. An Overview Of Reverse Mortgages If you own a home, you know mortgage products have moved beyond the basic 30 year fixed option. Reverse mortgages are one such product and here is an overview.

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