Learn about the disadvantages of a reverse mortgage.
There are many disadvantages to a reverse mortgage, many of which are not fully disclosed at the time the paperwork is signed.
When you enter into a reverse mortgage agreement you are basically accepting the slow sale of your home.
When the final payment is made you are expected to leave the property, without any real money except whatever might be in your bank account at the time.
Eviction notices, foreclosure notices, and all kinds of other notices can be plastered all over your home while the sheriff comes to take you out of your home.
You must be at least 62 years of age in order to participate in a reverse mortgage. This alone is one of the many dangers of a reverse mortgage. While it might seem like a good idea now, one of the greatest drawbacks of reverse mortgages is that it is systematically selecting our oldest and most alone family members.
With some careful word selection, many of these reverse mortgages are being signed by men and women who are hearing things like, "you get to stay in your own home", which is only partially true.
Telling people what they want to hear and what they need to know are two very different tactics. The reverse mortgage companies are looking ahead to the future while the families are looking at the aspect of a wide variety issues.
Many of the disadvantages of a reverse mortgage will not become clear until couples and individuals over the age of 62 find that their last reverse mortgage check has cleared and they are supposed to find themselves a new place to live.
This will create enormous financial hardships on families all over the country. Many families will need to use the equity in their parent's family home in order to get them into nursing homes or private care facilities. Without a family home, there is nowhere for the family members to negotiate from, let alone a place for their parent to sleep.
One of the greatest disadvantages of a reverse annuity mortgage is that there is no telling what will happen in 20 years.
Perhaps the homeless rate will suddenly skyrocket. Or perhaps a kind hearted family member will try to take in their beloved relative further increasing financial burdens on others.
Overall, we would like to think that these reverse mortgage plans include protection against the buyer in case the funds have not cleared. Of course, for every reverse mortgage offered it means that several families must be turned away.
Don't be fooled by all of the creative marketing out there. There are many disadvantages for reverse mortgages that you should know about prior to signing your house over.
If you want to know more about how a reverse mortgage works, I would recommend picking up a copy of Reverse Mortgages for Dummies on Amazon. It's a cheap book but the information could save you a lot of money in the end.