There are situations which could sometimes compel us to make decisions and choose what’s best for us, no matter how it hurts. I can still remember when the kids were young and I used to dream about having our own house without worrying about the rent every month! That was the driving force which led me to gamble with mortgage the time I bought our very first home. Lucky for me, me and my spouse were able to tide our family over. Just imagine the sense of relief I felt after shelling out the last payment for the house which was then called officially and irrevocably OURS!
No, I am not on the verge of applying for reverse mortgage, thank God, not yet! But God knows how many times I’ve toyed with the idea when something tight comes around. I have some friends—a handful of them, I must say—who took the “reverse mortgage plunge” and so far, are not having any problems but there were indeed frantic calls from them ranging from the wee to ungodly hours just because they heard reverse mortgage problems and would require some level of comforting skills from yours truly.
Which led me to believe, not all people whose homes are now under reverse mortgage are aware of its pros and cons or how it really works, partly due to the fact that reverse mortgage is a fairly new way to get some cash out of your acquired home. For starters, reverse mortgage is only available for homeowners age 62 years and above. Moreover, the senior must physically occupy the house in question and it must be his or her principal residence. The greatest selling point of reverse mortgage is that you don’t risk getting kicked out of your own house and you are not expected to pay anything just as long as you live in that house. The downside however, would be, in the event you suddenly, unexpectedly die, the amount borrowed against your home should be paid in full including fees and charges, which if left unattended for quite some time can grow to astronomical proportions!
Reverse mortgages are calculated by month, just like any other mortgage. It means, from the time the borrowed money reaches your hands, its interest will also begin to run. Although there would be no pesky monthly collector, its unpaid monthly interests will automatically pile up, month after month.
In reverse mortgage, you still own your home thus making you responsible for its upkeep and other fees to be paid such as property tax and insurances. Failing to do so will only result to the lender’s demand of full payment for the money owed. Local and state governments offer reverse mortgage which has low fees and interest rate but they can only be used for paying property taxes. On the other hand, private loans are typically expensive and involve lots of charges and fees which will be charged against your loan balance. Another thing to consider when taking out a reverse mortgage against your home is that it can seriously mess up your taxes when filing.