| Reverse mortgage pitfalls are very real and is something you need to take very seriously when considering this type of loan. Unless God forgot your eyes and ears at birth, you have undoubtedly seen all the ads everywhere from your television set to your local newspaper. This type of loan probably fits well for many people as I'm certain that is does but there are many caveats that you need to pay very close attention to and be aware of when considering a reverse mortgage loan. There are well over a dozen types of reverse type loan concepts floating around out there at the time of this writing. Your first plan of action should be to seek out only those lenders who are offering a large selection of these types of loans for you to consider. If the lender you talk to only offers you a couple of different types of loan packages you need to be very wary as these types of loans are probably designed by the lender themselves and may not offer you the best rates and terms you can find shopping around. Reverse mortgage pitfalls need not to even occur if you are armed with the fact before seeking one of these loans. Most often these types of loans are structured around a few basic requirements starting with your age. As an example, HUD requires you to be 62 while more conventional lenders will be willing to loan to younger people. The major pitfall here is that the younger your age when the loan is made, the less interest you will be offered on that loan. This can have major consequences for you down the road. The inflation factor. It will never go away so as the cost of living expenses grow year after year will your loan payment increase as well? Your loan contract must stipulate a cost of living increase dictated by the local economy. If not, you must consider where you will be 10 years from now. Another very serious reverse mortgage pitfall may come in the form of property taxes. Yes, you the home owner must pay these year after year. Have you figured those into your income calculations a decade from now? Property upkeep. Yet another expense factor you must not ignore! Expenses such as your plumbing costs, HVAC, roofing, flooring and a tons of other things that pop up from time to time. You must include those costs as well. You must pay for all your housing insurance. Your lender will require up to the minute insurance coverage as they need to protect their investment. Again, make sure these costs are included. Lastly but far from least in your current utility costs. How much to you think you will be paying 10 years from now. They will continue to increase as previously mention in the inflation factor I discussed earlier. The bottom line? These are just a few of the things you need to consider and talk over with your lender. There are more and you will find these online if you know where to look. Add up all your expenses you will pay over the next decade and make sure these factors are included in any type of loan contract you agree to. The buying power you have today should be the same buying power you have 10 or 15 years down the road. Reverse mortgage pitfalls? Yes and no. Be aware of what you are doing and this may work out beautifully for you. Remember, knowledge is power and it is up to you to empower yourself! |
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