You've heard the pro's for doing a Reverse Mortgage...
... but what are the con's?
Any Reveres Mortgage provider should discuss both the plusses and the minuses with anyone concsidering a Reverse Mortgage. First and foremost, while the FHA HECM is a wonderful program it isn't neccesarily wonderful for every homeowner in every situation.
There are two significant things to think about before commiting to any mortgage, including your decesion to do a Reverse Mortgage.
1. Is there a financial advantage to the homeowner?
Financial advatages can range for the ellimination of monthly mortgage payments to the availability of Tax Free Cash for needed home improvements, medical
or perscription costs, paying of credit card or other consumer debt to name a few.
2. Are there other advantages to the homeowner?
For couples, the FHA HECM means that now matter which spouse should pass
first, the reamianing spouse can continue to live in the home without the fear or
burden of making monthly mortgage payments many times from a dramatically
reduced household income.
3. Just as with any other conventional refinance the longer you are in the loan
the less the overall costs are going to be. If you are planning on moving in 1 to
2 years, and can make your financial obligations you may wish to consider
other options.
And what about the cost?
Cost: While this is a FHA and HUD program, the federal government does not loan money to consumers. Just as with any mortgage there is a cost, banks do not lend money for free.
Just as with any conventional mortgage there are certain fee and costs such as, appraisal, title, originaion, etc... the ony diffene in the actual costs are the required FHA Insurance and the cost of the required HUD counseling. One big differnce between the FHA HECM and conventional loans though is that by law, all of these fees and costs must be show to the borrower up front - at least for the FHA HECM, by law conventional lenders do not have to show borrowers these fees and costs, even though they are there and the borrower will end up paying for them. But, hopefully new legislation will make this "dark secret" of the conventional lending world become more transparent.