Reverse Mortgage Disadvantages | Cons of HECM Reverse Mortgage Loans Updated 2018

Reverse Mortgage Disadvantages | Reverse Mortgage Cons 2018

Advantages Disadvantages

There are no mortgage payments due while you are living in the property.
You’re responsible for property taxes/insurance/maintance. Any accrued monthly costs such as the mortgage insurance premiums, interest charges, and lenders service fees are due when the loan is paid off.

If the last surviving owner passes away, the loan must be repaid before the home’s title can be transferred to the borrower’s heirs (most lenders give 12 months for the heirs to make a decision).

Reverse mortgage loans do not affect Social Security or Medicare benefits

Payments may impact Supplemental Security Income and Medicaid payments

Income from a reverse mortgage is not taxable.

Interest is compounded on reverse mortgage and cannot be deducted from income taxes until it is repaid.

The value of the house, not the homeowner’s current income is used to determine eligibility. There currently are no income, health, nor credit score requiremnets for seniors interested in the HECM loan.

In order to qualify for a reverse mortgage seniors need to be at least 62 years of age or older, own their home (have equity available), and have attended a mandatory HECM counseling session.

You are able to receive payment in several different ways such as taking a credit line, a lump sum, or a combination of both. With interest rates at all time lows now is a great time to consider one.

The HECM income ends when your home equity term is reached, you sell your home, your home is not your main principal home for 12 consecutive months, or the last borrower passes away.

Homeowner can enjoy retirement from the comfort of their homes, wihout having to sell the property thus persecing a legacy for the next generation. Tap into your existing equity to fund a better retirement wihout monthly payments or without having to sell or move homes.

You must pay off the remaining home mortgage with your own money or with proceeds from the reverse mortgage loan.

Homeowners can keep the title to their homes until they pass away, move, sell their home, or reach the end of their loan term.

This is a loan agaisnt the property, seniors are responsbile for the property taxes and if payment is not made the bank can take your home. This rarely happens but it’s worth bringing up that there is still some foreclousure risk.

Lenders cannot go to your heirs for repayment of your loan if the house sells for less than what was borrowed.

In some instances, the home must be sold to pay back the reverse mortgage when borrowers cannot make tax payment (seniors should always check their reports soo

Upfront costs or fees can be folded into the reverse mortgage from the start, instead of paying them at the beginning of the loan.

Usually the interest rate and upfront costs are higher for reverse mortgage than for the traditional mortgage or other equity loan. Upfront fees can add up over time.

Interest rates can be fixed or adjustable, but most are adjustable rates.

Reverse mortgages’ have variable rates that move up and down with the market conditions.

Money can be used for any purpose such as for home repair and maintenance, long-term care, medical needs, or paying debt.

Borrower will need to pay interest on the following when these are rolled into the loan: insurance premiums, broker’s fees, closing costs, and service fees.

As the owner’s age increases and the home equity increases, the amount that can be bor- rowed increases.

The homeowner is still responsible for paying property taxes, paying homeowner’s insurance, and maintaining and repairing the home. If not, your loan becomes due.

“There is a negative perception in taking a reverse mortgage from a Bank directly thus RMLD facilitates the ability for us to compare your offer with other lenders. The savings of money and time are measurable, there is never any pressure, we are always happy to explain how the program works to seniors.”

Reverse Mortgage Negatives in 2018.

Reverse mortgage industry has suffered from money hungry con artists who take advantage of the elderly by taking their reverse mortgage money, identity, or by selling products/services, which they don’t need including annuities or insurance products after they receive their funds.

The actual program is a safe government insured program for seniors – the program has been around for 22 years – most of the cons involved with the program have to do with sales people who take the seniors funds after they receive the reverse mortgage.

Cons Reverse Mortgage | what are the HECM cons

We will be updating this page with all the latest information on the current cons in the reverse mortgage industry. We want the public to be safe from Con artists, brokers who charge excessive fees, and those who steal your personal information.
Common cons or scams involved with a reverse mortgage loan

§  Stealing of personal information

§  Not really a lender but acting as if one

The current economy is allowing for con artists to prey on seniors who need financial assistance. Seniors who need reverse mortgage advice should avoid telemarketers or pushy sales people who are only trying to sell their product/service.

“The cons reverse mortgages – this program has so many safeguards and the government protects seniors so much that any cons will most likely be caused due to criminals.”

1.     The reverse mortgage is a loan – this can be viewed as a con – it is not free money – the interest rate that the banks charge will be added to the loan – while you don’t have any monthly mortgage payments you will be responsible for this when you either sell the home or pass away.

2.     The media says that their are high fees – we like to disagree as most of the fees are standard in the mortgage industry – the only fee which is excessive is the 2% mip (mortgage insurance premium) which goes to the government to protect lenders and borrowers alike. This is mandatory and everyone has to pay this fee.

3.    You cannot take out the whole equity (100% of the equity) the banks will only allow you take up to 70% of the equity available – this is done to reduce the risk that the bank takes on. Not really a con but something that potential borrowers need to know.