Sandi Boucini & Michelle Granger - RE/MAX Executive Realty



Posted by Sandi Boucini & Michelle Granger on 10/9/2019

Many times, advertisements create a false impression about reverse mortgages. Marketing depicts them as a simple, cheap way by which older homeowners can finance their retirement. It is critical to understand how reverse mortgages work because failure to do so might harm your financial future.

Studies show that many homeowners do not have a proper understanding of reverse mortgages. For a better understanding of what reverse mortgages are all about, here are some facts that you need to know:

You should understand that reverse mortgages are a home loan

Reverse mortgages are equity-secured, interest-bearing loans. You should also know that a reverse mortgage is not a government benefit. What it does is that it gives you the opportunity to convert your home equity into funds that can to use to cover any needs. 

Also, you must not forget that it comes with compounding interest and fees that, like any other loan, require repayment. Reverse mortgages are different from other home loans because there is no principal payment or interest during the time of the loan. Instead, your principal balance grows by the addition of this interest.

It is possible to forfeit your property with a reverse mortgage 

Another important fact that you should bear in mind concerning a reverse mortgage is that you can lose your home. Contrary to popular reverse mortgage advertising that you can always retain the ownership of your home, and that you can stay there for as long as you like, you might forfeit your property if you do not meet all their loan requirements. 

Examples of some loan obligations are home maintenance costs, property taxes, and others. If you are unable to meet all the loan requirements, you might lose your property to the lender. Losing your home not a palatable situation because you no longer have a place to rest your head and there is no more home equity.

You can outlive your loan money

Advertisements on reverse mortgages may tell you that they guarantee your financial security for the rest of your life. Do not rely on this statement. It is essential that you make necessary financial backup plans for your future.

Talk to your qualified financial advisor and consider all your options before signing up for a reverse mortgage. If you have a home with a reverse mortgage that you wish to sell, speak to your real estate professional about your options.





Posted by Sandi Boucini & Michelle Granger on 6/18/2014

Getting approved for a loan isn't always a good thing. You have to make sure you are a good borrower. What makes a bad borrower? There are several types of loans you should avoid if you don't want to overextend yourself and potentially damage your credit rating. Payday loans Interest rates on pay day loans often run high into the triple digits.  They are designed to be extremely short-term. Pay day loans often put borrowers in a cycle of debt that can be difficult to break because borrower usually can't pay off the original loans and keep returning to the service. Car title loans Borrowing against an asset is usually never a good idea. Most car title loans charge interest with an annual percentage rate of well over a 100 percent and they are generally due within one month. If the borrower can't pay back the loan, the lender will take your car and sell it. Tax refund anticipation loans Another loan with an extremely high interest rate is a tax refund anticipation loan. If you need more money you can change the amount that's withheld from your paycheck. That way you give yourself a raise and the government takes only the amount that's owed. Co-signing a loan Co-signing a loan for someone else has you taking on all of the responsibility of another financial obligation with none of the benefits. Too often co-signers find themselves left with the loan long after the other person on the loan has stopped paying. It usually never makes sense to take on someone else's debt.  




Categories: Money Saving Tips