For seniors who have equity in a prior home loan, reverse mortgages are growing in popularity. These are loans for seniors at least 62 years of age, and allow them to pay no monthly payments until they pass away or move out of the home – in fact, many people actually receive money from a reverse mortgage, as long as they live in their home themselves.
Reverse mortgages can be very beneficial for some people, but they aren’t without risks. At Altius Mortgage and our partners, Mortgage Ogden, we’re here to help you navigate those risks. Here are a few common mistakes people make with reverse mortgages, and how you can avoid them.
Reverse mortgages can be expensive, and can come with high closing costs – origination fees can be larger than conventional mortgages as well. In addition, you will have to pay HUD mortgage insurance up front. If you can’t afford these hikes in insurance, taxes and maintenance, a reverse mortgage might not be for you.
Some couples attempt to remove the younger borrower from the title so only the older borrower remains. The flaw here, though, is that if the older spouse passes first, the younger one is then responsible for paying the balance. If arrangements haven’t been made or instance doesn’t cover expenses, and the younger spouse doesn’t qualify for their own reverse mortgage, he or she might have to sell the home and move.
Not all condos will necessarily qualify for reverse mortgages, so don’t simply assume. Condos must meet tighter FHA regulations than single-family homes, and condo developments as a whole can be disqualified from reverse mortgages if a high number of owners are delinquent on association fees.
Reverse mortgage scams have risen in popularity right alongside the mortgages themselves. If a reverse mortgage broker is attempting to charge you crazy rates and fees, perhaps even as high as the original loan, this could be a telltale sign. Other scammers may provide fraudulent loans or attempt to steal identities. Our brokers can help keep you far away from these scams.
Reverse mortgages can affect Medicaid benefits and Supplemental Security income, if you don’t take the right precautions. If you take all your money up front and deposit the proceeds into a bank account all at once, you could be making yourself ineligible for these benefits. Contact your financial advisor or SSI administrator before moving forward to make sure you’re in the clear here.
Want to learn more about reverse mortgages, or any of our other mortgage services offered? Speak to the mortgage brokers at Altius Mortgage and Mortgage Ogden today.