Reverse Mortgage on Your Huntsville Alabama Real Estate: Pros and Cons

Reverse mortgages are a popular option for homeowners who are 62 years of age and older and need additional income. Credit scores and income are not part of the qualification process for a reverse mortgage, so they're fairly easy to get.

But is a reverse mortgage right for you, your parents or grandparents? Here are some pros and cons to consider before making your decision:

Pros of getting a reverse mortgage on your Huntsville Alabama real estate

When you get a reverse mortgage, you can:

• Use the money to supplement social security, pay for home improvements or meet unexpected medical bills.


• Choose the payment method you prefer: monthly payment, line of credit or lump sum.


• Make no payments on the loan (monthly or otherwise) unless you die, move or sell the home. If any of those events occur, the loan is due in full, plus interest and fees.

Cons of getting a reverse mortgage on your Huntsville Alabama real estate

Unfortunately, there are several disadvantages to taking out a reverse mortgage:

• You pay origination fees that are almost twice as much as origination fees on conventional mortgages.


• There are a wide variety of reverse mortgages available from a lot of different sources. This makes an already complex loan even more confusing. Shop around, compare and attend an information session with an approved HUD counselor before deciding on a reverse mortgage.


• It may impact your eligibility for Medicaid and other state or federal programs. For example, if you currently receive any "need based" benefits such as Medicaid or Supplemental Social Security Income (SSI), reverse mortgage payments will have to be structured so that monthly payments will be spent within the month they are received. If not, such payments will be considered income, and may make you ineligible for public benefits. Contact your benefits provider to ask about how a reverse mortgage may affect your eligibility.

If getting a reverse mortgage on your Huntsville real estate, or the home of your parents or grandparents, is the right thing to do, you might want to consider FHA's reverse mortgage program called The Home Equity Conversion Mortgage (HECM). According to HUD, the HECM is a safe plan that can give older Americans greater financial security.

You can receive additional free information about reverse mortgages by contacting the National Council on Aging at (800) 510-0301. I'm also available to help you with this difficult decision. Give me a call today at 800-803-0053, 256-508-0211 or email mike@movetohuntsville.

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