Almost 80% of Americans aged 65 and older own their own homes. If you still owe money on your home, however, it may not feel like it’s really yours until it is all paid off.
Some people consider taking a reverse mortgage to pay off traditional mortgage fees. Others think a reverse mortgage is the answer to lack of retirement planning or just some extra spending money to have in case of an emergency.
Have you weighed the pros and cons of a reverse mortgage and still are unsure?
To learn about the basic reverse mortgage risks and what you should do if it happens to you, we have made this guide for you.
What is a Reverse Mortgage?
A reverse mortgage is a loan that a person 62 years and older can take when there is the right amount of equity in their home.
This type of loan will let a homeowner borrow money while using their home as collateral. The title of the house is still in the owner’s name, but the borrower does not make a monthly payment like with a traditional mortgage.
Instead, the loan is paid back once the person that borrowed doesn’t live in the home anymore. The amount that the homeowner owes will go up over time as fees and interest are added year-by-year. The equity in your home will go down as the loan balance goes up.
A homeowner with a reverse mortgage will still have to pay taxes on the property and keep homeowner’s insurance. They will also have to continue to use their home as their main residence and keep the house in good shape.
You will get the money upfront to use however you’d like, but it is not free. The money you owe, plus interest, will need to be paid back once you leave the home or after your death.
Risks of a Reverse Mortgage
While a reverse mortgage may sound like a simple way to enjoy your retirement years, there are strings attached that must be considered before you take out this loan.
Remember that it is possible to outlive the money the loan provides as well. This means that you may not even be financially secure until your death and you will have to pay back the loan at that time.
One of the biggest dangers of a reverse mortgage is that you will lose your home if you don’t meet the requirements of the loan. If you don’t fail your property taxes or you lose your home insurance, the lender can foreclose on your defaulted loan.
If this happens and your home isn’t worth the amount you owe, the lender can come after your other assets for the rest of the money.
What Do You Do When Facing Foreclosure?
Whether you are dealing with foreclosure due to not being able to pay or from making a bad reverse mortgage deal, there is always a chance to turn things around.
As soon as you are faced with the possibility of foreclosure, you should get in touch with a trusted attorney.
We have the skills and know-how to help you fight for your home. Our record in winning these cases for our clients shows that we know how to handle banks and financial institutions that are trying to do you wrong.
Stay Away from Reverse Mortgage Risks
Reverse mortgage risks may seem like things that wouldn’t happen to you, but you never know what tomorrow will bring.
Don’t fight for your home alone. Speak with an experienced attorney today.
Contact us to get the legal help and support that you need when facing foreclosure.