Disadvantages Reverse Mortgages
Disadvantages Reverse Mortgages - High Fees
One danger of a reverse mortgage is paying high fees or not getting the best rate on a adjustable rate mortgage (ARM). Many reverse mortgages are adjustable rate mortgages.There are many disadvantages in these type of mortgages, when trying to buy a home. The same problems can apply for reverse mortgages as for
traditional mortgages. You can be risking your security with the uncertainty of a reverse ARM. Also negotiate the fees and closing cost with different lenders.
Disadvantages of Reverse Mortgages - Reduced Net Amount to you
Another disadvantage of a reverse mortgage is the amount you will receive will be less the taxes, insurance, and fees that are usually paid into an escrow account when you pay your mortgage. With a reverse mortgage, it actually works in reverse. In comparison, with a traditional mortgage fees are added to the amount you have to pay. With a Reverse Mortgage the fees are subtracted from the amount you receive. Therefore, reducing the net amount of the money you'll get each month.
Disadvantages of Reverse Mortgages - Home must be Retained as Primary Residence
Another disadvantage of a reverse mortgage goes to the actual structure of the loan. As it is stated in most of the loan documentation, you will retain use of your property as long it is your primary residence. The problem is that, as reverse mortgage holders are senior citizens, the possibilities exist either the purchase of a second home in a warmer climate or the possibility that you may be confined to an assisted care facility. Both situations will default the terms of the loan and the home must be sold.
Disadvantages Reverse Mortgages - Financial Security
Another disadvantage of reverse mortgages once the payments stop and emergencies occur, will be have funds to cover these unforseen situations.Take into account the future and remember that the money from the reverse mortgage could allow you to keep your independence at home should you or your spouse's health take a turn for the worse in the future.
| Disadvantages Reverse Mortgages