REVERSE MORTGAGE ANSWERS

Guest post by Financial Fast Lane

Reverse mortgages can be a powerful financial tool for the right homeowner, but they are not right for everyone. Anyone considering a reverse mortgage deserves a clear, honest understanding of both the benefits and the downsides before moving forward. One of the most important things to understand is that a reverse mortgage loan balance grows over time. Because there are no required monthly mortgage payments, interest and mortgage insurance premiums are added to the loan balance as funds are used. Reverse mortgages also tend to have higher upfront costs than traditional mortgages. These costs may include FHA mortgage insurance premiums, origination fees, and standard closing costs. While these are often financed into the loan, they should be carefully considered. Borrowers must continue to pay property taxes, homeowners insurance, and maintain the home. A reverse mortgage removes the monthly mortgage payment, but it does not remove homeownership responsibilities. The home must be the borrower’s primary residence. Extended absences, moving, or selling the home can cause the loan to become due. When the loan becomes due, heirs typically choose to sell the home, refinance the balance, or walk away. Reverse mortgages are non-recourse loans, meaning neither the borrower nor heirs will ever owe more than the home’s value. Reverse mortgages are generally best suited for long-term planning, not short-term needs. Understanding how the loan works before proceeding is essential. For honest guidance and education about reverse mortgage options, contact Jeff Marsack at 586-943-8173 .