Is Reverse Mortgage a Good Idea?
Everyone needs more money in their life regardless of the age they're in. When people reach the age of retirement, they think the time of their life is long gone but actually, with a good spirit and a healthy mind, it can be quite the opposite of that. The only problem that might occur in finally reaching the dreams for people that are becoming seniors is money.
A government pension is often too low to even be used for normal life needs. People getting retired must find new ways to get income and some have no other choice but to get a loan from the bank. However, banks are not very happy to give seniors standard loans. They think seniors are not eligible for regular loans, so they invented something else called reverse mortgage loan. But is the reverse mortgage loan a good idea or is it another scam and a big ball of lies?
Based on our experience, we can say that the reverse mortgage plan is an excellent choice for every senior. The loan is based on the property seniors own and it is specially designed for everyone that has reached a certain age. Knowing that retired people can't afford to pay monthly interest, the banks invented a loan by which people are not obligated to return a single dollar until the rest of their life, yet, they can receive a lot of money just for being seniors. Some may ask how is this possible? Where's the catch?
This is a good question and there must be something, right? Well, there is. When a senior signs the agreement with the bank to get a reverse mortgage, they agree to give an equity of the shares of their property. Let's say it is a house that's worth $250.000 and the person asking for a loan is 65. The house gets a mortgage but the owner will not pay a single dime to the bank ever. Only after the owner decides to sell the place, the bank will activate the mortgage. Let's say the senior turned 80. After the house is sold, the owner will get most of the money, but the bank will still get what they borrowed and will receive extra from the interest over the years. If the owner never decides to sell, they are not obligated to return any money to the bank.
Eventual selling of the house is the number one reason why a senior must ask for the best interest rate before they sign the agreement. Even if they're not interested at the moment to ever sell their own house, it's good to find the best rates. Times change and you can never know what will happen in the future. The reverse mortgage plan is great for most, but if you get to the point of selling under the mortgage, it's good to know what is up in front of you.