What You Need to Know About a Reverse Mortgage

by Robert V. Ortiz 08/04/2019

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.

About the Author
Author

Robert V. Ortiz

 Sunshine State Tampa, LLC dba Atlantic Coast Equity & Acquisitions is a Real Estate Investment Company in the Tampa Florida area. They do Rehabs, Fix & Flips, Buy & Hold, Single Family and Commercial Multifamily properties throughout the USA. The owner Robert Vincent Ortiz has 21 years in the Real Estate and Finance industry. He was a Licensed Mortgage Broker for 14 years and is currently a Licensed Florida Sales Associate/Realtor® and has been for the last 10 years. He is Certified to do Residential and Commercial Real Estate. Is on the Famous “Coach Cook Team” at KW Commercial in Tampa, Florida and was personally recruited by the Co-owner of Keller Williams (Joe Williams) who saw Robert speak at a Networking event. Robert has personally done over 8,000 BPO Valuations for 35 different Lenders & Asset Management Companies and considered one of the best in the country. He is also a Certified Negotiations Expert and currently negotiates Short Sales for 7 different online Investment companies. He is also a Certified Probate Real Estate Specialist and has been a NOTARY Public for the last 13 years. Robert is one of the Tampa Florida Power Players on “The American Dream” Network TV Show. We are looking to connect with other people in the Real Estate industry. Specialties: Real Estate Investing. Buying and Selling residential/commercial real estate with creative financing strategies. Acquisitions. Wholesaling real estate to other investors.