subject: Alternatives to Consider Before Getting a Reverse Mortgage [print this page] Reverse mortgages are hot. Baby Boom demographics, inadequate retirement funding, and the problems in the traditional mortgage market (pushing brokers into alternate products) have to do marketing of reverse mortgage products to senior homeowners one of the hottest niches in the mortgage market business.
And the effort is paying off for marketers. Federal insured Home Equity Conversion Mortgages (HECM) are, the predominant type of reverse mortgage in the U.S. Recently, theIs the number of HECM arose about 9,000 per month on average, more than double the average in 2005. In addition, around two thirds of the total HECM reverse mortgages ever issued have been developed over the past two years.
Reverse mortgages are only for homeowners age 62 and older who have paid off their mortgage or only a small mortgage balance. The selling point for these loans is enticing: tax-free income in retirement, as long as the house itself even forLife, no monthly payment loans, no repayment until the house is sold, and payment arrangements to meet the flexibility to every wish! In many cases, a reverse mortgage is the ideal tool for older homeowners.
But there is one major drawback with reverse mortgages: high initial investment costs of closure, which can reach some U.S. $ 20,000 or more. With the usual interest accruing on the loan balance can be combined, the investment costs make it an extremely expensive way to borrow. To spread this cost out andmake the cost of borrowing makes sense, it is vital that the borrowers' ability, in the apartment and stay for at least 5-7 years preferably be more secure. Unfortunately, the government shows that paid off most of the data HECM in seven years or less.
Thus, while a reverse mortgage can be a good fit for the elderly in many situations it is always important to carefully look for other options to see if a cost-effective means of attaining your goals to finance retirementavailable.
We discuss among seven alternatives for you to draw into consideration:
1. Intra-Family Loans Do you have a relative or friend with deep pockets and a good heart? An intra-family reverse mortgages an excellent opportunity to take advantage of a reverse mortgage can win, but you avoid most of the costs. The concept is simple: Instead of a pension credit, you borrow in exchange for a lien on the house, structure an arrangement with a relative or friend with you the moneyplace secured with you, of course, at home. You can avoid most of the advance in this way costs and more flexibility to set interest rates and credit conditions. There is even a company called Circle Lending that in the preparation these specialized loans that the "official" arms length transactions, and then provides monthly loan servicing as well as a traditional lenderwould do.
