Do Reverse Mortgage Disadvantages Outweigh the Advantages?
Reverse mortgage disadvantages can overshadow the benefits, and many baby boomers understand that. The day of the baby boomer is back, except this time, it is the final chapter. Our baby boomers have entered the retirement era of their 
lives and this special group of people is not doing as well as they may have hoped. They have lived through several periods in history when many were losing everything. The 401k and retirement funds that we used to rely on have stumbled more than once and the stock market is starting to make crashing every ten years a regular habit. Many of our seniors are faced with the possibility of living their day-to-day lives in a constant struggle, and understanding reverse mortgage disadvantages and advantages is paramount.
They Extol The Benefits instead of the Reverse Mortgage Disadvantages
Several years ago, the television was filled with reports about a new type of loan for the elderly. The reverse mortgage loan was introduced as the senior savings savior. Many people signed up and then it faded into the background of the news of the day. From time to time, we hear from them again, extolling the benefits of the reverse mortgage with little on the reverse mortgage disadvantages. We hear how great they are and what they can do for our seniors. Rarely do we hear horror stories on how reverse mortgage disadvantages caught up with an elderly company who decided upon refinancing their home with this instrument. That is because most of the buzz about the reverse mortgage is advertising. Almost no one has ever reported publicly on reverse mortgages pros and cons.
Timing Is Everything to Overcome Reverse Mortgage Disadvantages
One of the perks that is frequently advertises is how a reverse mortgage loan can help you in your retirement; however, one of the reverse mortgage disadvantages is that you must be 62 years of age to qualify. Many of our retirement age seniors are disabled and have been on disability for years before they hit that age. By the time they qualify, they may have lost everything. Many of the reverse mortgage naysayers are quick to point out that 55 years of age is a much more advantageous time for many of those who will eventually need the loan. By age 55, the average homeowners have paid out their mortgage and are thinking about refinancing their home. The reverse mortgage would save those hundreds of thousand in second or third mortgage payments and much more in stress related illnesses.
Reverse Mortgage Disadvantages: A Little Here – A Little There
When thinking about reverse mortgages pros and cons, you have to wonder why the loan program is so incomplete in some areas. For instance, many seniors have to have both Medicare and Medicaid in order to avoid massive medical bills that one or the other does not cover. Medicaid is like the social security supplement program in that it helps you to cover hospitalization costs that social security alone does not afford you in income. Medicaid will cover many of the things Medicare does not, and vice versa. If there are reverse mortgage disadvantages, it is here. A reverse mortgage will not affect your social security or the supplemental income. It also does not affect the Medicare that our seniors depend upon. Medicaid, however, is affected by the extra income that a reverse mortgage supplies. This is one of many hands that reach out and digs into your monthly check, and is one of the important reverse mortgage disadvantages.
Slight Of Hand Or Slip Of Tongue when Not Mentioning Reverse Mortgage Disadvantages
Finally, reverse mortgages allow you to receive a check every month or as a great credit line to turn to in emergencies or sudden unexpected cash needs. This is great news and much needed money that the retiree can depend on in a pinch. There is a down side to this rainbow, however, that is only disclosed in the total annual loan cost (TALC) after the retired applicant has received all the beneficial news that they are bombarded with by eager salespersons. The fees associated with a reverse mortgage can run well into the thousands of dollars and this money comes right off the top of your equity, lowering the amount for which you qualify. The reverse mortgages pros and cons scale does not always balance, as it should.
The Truth In Lending Act with Reverse Mortgage Disadvantages
The loan payments are not taxed; however, when the loan comes due, you or your heirs will have to repay the loan, the interest, and all unpaid fees associated with it – another one of the substantial reverse mortgage disadvantages. The interest rate and those expensive fees will vary from lender to lender. The problem is the difference can actually be staggering. You really have to dig very deeply to find out which lender has the best fees and interest rates. They also vary on the amount of money you can receive. If a retiree does not compare fees, terms of service, and their rates, he or she could lose a substantial amount of money in the end game. This is usually the last thing on the applicant’s mind after being bombarded with so much information. If it were not for the truth in lending act, they may not be told many of the reverse mortgage disadvantages at all.
All Press Is Not Created Equal with Reverse Mortgage Disadvantages
A reverse mortgage loan can be a wonderful thing for retirees who really need the money; however, applicants should exercise extreme care when qualifying for these loans and research the reverse mortgages pros and cons as thoroughly as possible, including the various companies and institutions that offer them. Reverse mortgage disadvantages do not receive the quantity press that the advantages enjoy.