There has been a lot f talk on television and newspapers about reverse mortgages. Typically, nothing bad is being said about them, and they seem to be the salvation for many homeowners. However, there is a potential dark side to these mortgages, and one must truly know what they are getting involved in. Today we are going to discuss what a reverse mortgage truly is and if you should consider applying for one.
In the simplest terms, a reverse mortgage just allows homeowners who are over the age of 62 to access the equity they have built up in their home over the years. The owner maintains possession of the title while using the loan for any expenses they may have in their life. This money can be used for medical bills, travel, or just extra money to live on through retirement.
However, the homeowner must have a significant amount of equity stored up in the home. This is because property insurance, taxes, and other fees will need to be paid during the life of the loan as well.
As opposed to many traditional loans, the balance on a reverse mortgage will increase over time. This is because the homeowner is not making payments on the loan amount, which leads to the interest being charged on the outstanding amount.
It is also important to realize that the benefit from a reverse home mortgage loan is not going to be deductible. These are not considered to be traditional loans nor or they a verifiable source of income. With that in mind, it is not possible to deduct the amount of the loan when tax time comes around.
As with all loans, due your diligence and research as much as possible to understand if a reverse mortgage loan is going to be right for you. You can get help from a mortgage banker Long Island to know more about reverse mortgage.