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What Are The Advantages And Disadvantages Of A Reverse Mortgage?
Michigan is under a great financial challenge and it’s important for seniors to be aware of their options. There has been a lot of talk lately about Reverse Mortgages in Michigan. This is a great service that is available for Michigan seniors and offers a ton of benefits for home owners. These features can make all of the difference between just barely getting by or having a great life.
As seniors get along with age they will find themselves in need of having enough money set aside to pay for many extras. These include things such as prescription medication, medical care, home repair, and emergency funds. Many seniors like the ability to have this extra amount of income as it helps them stretch out the monthly budget.
Of course it is always nice to have extra money on hand to afford the unexpected extras. Some seniors take advantage of being able to travel and to go to see the world. They also enjoy being able to help out their family and loved ones. Others really enjoy being able to remain independent and to not be a burden on their sons or daughters.
Many seniors really like the idea of being totally independent. There are two sides to this great prospect. On one hand you can be totally independent of relying on your family. This can come in the form of having round the clock care from health professionals. To many seniors this can be a great luxury and add total peace of mind.
The other type of independence is having totally financial freedom from stress and worrying. It is like having a big weight taken off of your shoulders. Having total financial independence means having real freedom of choice. No longer will you have to worry about having to just “get by”. Having a reverse mortgage can really work miracles by adding a cushion of support in your daily life.
So you see having real independence really depends of two major things – financial freedom and having the freedom of doing what you want - whenever you want. That means that as a senior you get to live your life by your standards. You set the pace and make the rules. Having more money on hand gives you the opportunity to make a substantial difference in your life and in the lives of others.
In order to take advantage of the great features of a reverse mortgage you need to take in the pros and cons.
The cash payments you receive are tax fee since they are loan proceeds and not income, and they generally do not affect Social Security or Medicare benefits.
There are no minimum income requirements to qualify and no credit checks.
You can use the money for any purpose.
You may be able to create a cash flow stream for the remainder of your like.
Reverse Mortgages are complex. You must receive free, government-approved independent counseling. This is to insure that all of your questions have been addressed and that a reverse mortgage is right for you and your family.
Mortgage Insurance Premium (MIP) is the insurance required by HUD that protects you and your heirs from never owing more than the home is worth.
One of the biggest disadvantages of a reverse mortgage are the high closing costs. If you think you might be moving in the next few years a reverse mortgage may not be the best decision. This program makes the most sense for those who plan to stay in their homes permanently.
Reverse mortgages are relatively expensive. The interest is added to the loan balance each month, and the total interest you owe increases greatly over time as the interest compounds.
A reverse mortgage uses up the equity in your home, so it reduces what you have left to leave your heirs.
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