Reverse mortgages are becoming more and more popular among older Americans and older people in other countries. But the matter is, most people are not aware of the dangers of reverse mortgages.
You may want to travel to a luxury place, buy your pay off a current mortgage, plan a fun vacation, or buy something else that is very expensive, and this may have made you thought of reverse mortgages as an easy option.
So the idea of being able to get access to a large sum of money so fast as a reverse mortgage from your home may sound interesting to you.
But before you consider this type of loan, here are some important disadvantages of them for you. . .
1. Expensive Interest Rates
Reverse mortgages are one of the most costly types of loans to get. This is one of the most important reverse mortgage pitfalls.
You may have heard that bad credit loans usually have a very high interest rate. Well, reverse mortgages usually have a higher interest rate.
So after a short time that you have gotten your money, you will fall more an more in debt. So after a few years when you want to sell your home, you'll see a large portion of your home value will go as the repayment of the money you had borrowed.
Since your home is your biggest and most important asset, you want to protect it and keep its high value in your own hands as much as you can.
You can simply apply for other types of loans, like bank home equity loans, to save money while still owning your home fully.
2. Having to Deal with a Complex Contract
Another disadvantage of reverse mortgages, is their complex contract.
It is very common that you'll get confused by all the parts and technical words inside the contract.
Also some reverse mortgage companies do not disclose everything in the contract and later you may find out additional requirements and charges that you were not told in the first place.
As you see, because of the points mentioned about and also more, it is wise to do more research and be careful before you decide to get a reverse mortgage. It can save you a lot of money.
Want to get a reverse mortgage? How about you calculate your cash and expenses using thiseasy, free reverse mortgage calculator ?
It will help you save a lot of time instead of doing it by hand, and also helps you choose the best and most affordable mortgage companies.