7 reverse mortgage disadvantages

7 Reverse Mortgage Disadvantages

Plan Properly & Apply Appropriately to Avoid Problems or Scams

#1 - Reverse Mortgage Disadvantage

You can access your home's equity as cash using a reverse mortgage, but obviously it is not exactly free money. As you know, banks and lenders can only be in business if they make money, so a reverse mortgage product need to yield a return from somewhere.

When banks lend you funds that are then secured by a conventional mortgage, it entitles them to get repaid what was lent, plus the agreed upon interest. However, with a reverse mortgage, the bank never receives payments of any kind until you refinance or sell the home. Once you pass on and/or transfer ownership, the reverse mortgage will be repaid.

Essentially, It is a standard business transaction for the bank. You get the cash now and use it how you see fit, and the bank has a guarantee that it will eventually get repaid, plus interest when the house ownership is tranfereed at the end.

TIP - Be sure to take advantage of historically low inteest rates and gain access to the equity in your home, then use it when you need it. The window for these interest rates is only open for a short time.

Next - Disadvantage #2 >>

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