FBI has released several reports that show an enormous increase in reverse mortgage loans. Despite this growing popularity, most seniors are ever warned of particular reverse mortgage misconceptions. They are always told that by taking this financial package that they are giving up their home, or rigorous application processes are involved, or they will pay outrageous fees. According to Medford reverse mortgage provider, all these are misconceptions about these loans. The fact that there is a lot of conflicting information, consumers find it difficult to determine whether they can take this financial package.
Common pitfalls to consider
Losing your home ownership
The first misconception is that borrowers of reverse mortgages are giving up the title of their home. You should note that using this financial packages does not mean a borrower is going to give up ownership of his home. Rather, you maintain the ownership of the
house until your home is sold or the lender is repaid. If you have got means of repaying the lender, instead of selling the house, you can pass it on to your children.
Enormous fees involved
Some customers believe particular fees that are associated with a reverse mortgage are pitfalls. However, you should remember this is like any other loan. Borrowers are expected to pay closing costs, origination fees, servicing fees, and mortgage insurance premiums. Moreover, borrowers are required to pay interest on the loans they borrow.
Usually, these costs are included in the loan. Therefore, unless you are ready to settle them upfront, you are not required to pay fees before taking the loan. It is advisable to discuss the lender’s fee structure during the application process. This is necessary to avoid any possible misunderstandings or pitfalls.
Most borrowers fear the application process as they believe it is a tedious process. For one to qualify for this loan, you need to have your home inspected and appraised. Moreover, you need to attend a session with a counselor. It is true this loan takes some good effort from the borrower part. In most cases, you will find the benefits worth it.
It is important to note that requirements for a reverse mortgage loan are quite similar to other types of loans. For instance, if you want to refinance your home, you will be required to submit an appraisal. In fact, the major difference is that if you are taking this type of mortgage, you will be required to attend a counseling session.