If you are 62 or older, a reverse mortgage is available to you. A reverse mortgage may seem like a risk-free source of extra income that should not be passed up. However, while this type of mortgage has its advantages, it is a serious decision and should only be made after fully understanding what it is, how it works, and its pros and cons.
The main advantage of a reverse mortgage is that the homeowner can maintain ownership and continue to live in the home, sometimes receiving extra income as well.
A reverse mortgage allows homeowners aged 62 and older to convert their home’s equity to cash based on their age and current interest rates. The lender makes payments to the homeowners in the form of a lump sum or line of credit. The homeowner can use this cash without restriction to pay off their conventional mortgage, pay bills, make repairs, take vacations or in any other way they see fit.
The loan does not need to be paid back until the home is sold or vacated. However, if the loan amount exceeds the homeowner’s equity in the home, the house will become the lender’s property.
Type of Reverse Mortgages:
- Single-Purpose Reverse Mortgages: State or local government agencies may offer these mortgages.
- Home Equity Conversion Mortgage (HECM): The most popular type of reverse mortgage. The Department of Housing and Urban Development (HUD) administers this federally insured mortgage.
- Proprietary Reverse Mortgages: Banks, mortgage companies, and other private lenders offer these types of mortgages.
Disadvantages of Reverse Mortgages:
- They will likely be more expensive than traditional loans.
- You can be charged origination fees and closing costs.
- The homeowner continues to be responsible for the property taxes, homeowners insurance, home repairs and utilities.
- The equity in the home can easily be used up by a reverse mortgage.
Why You Will Need A Title Company When Getting a Reverse Mortgage:
- You will be required to purchase a lender’s title insurance policy to insure the title of your property.
- Your title company will meet with you to sign all the paperwork at the closing. Choosing a reputable and experienced title company will make the process seem effortless.
Why You Need Richard S. Weinstein, An Experienced Real Estate Attorney, When Getting a Reverse Mortgage
A real estate lawyer can advise you in your decision as to whether a reverse mortgage is necessary or advisable for your situation and if your lender is violating the law, he can file a complaint with the appropriate governmental agency
With over 50 years experience as an attorney, Richard S. Weinstein assists clients with the important financial situations in their lives. Whether you are dealing with bankruptcy, real estate (both commercial and residential, including short sales, foreclosures, and title insurance), estate planning, probate, business formations, or sales or mergers, Richard S. Weinstein is the attorney with the education, experience, and knowledge you need! Call us at (561) 745-3040 or visit our website at rweinsteinlaw.com.
Law Office of Richard S. Weinstein, P.A.
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Jupiter, FL 33458
Phone: (561) 745-3040
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