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Reverse mortgage pitfalls. It should be a statement that everyone one should contemplate when considering taking such a loan.

Unless you were born missing your eyes and ears you have probably seen the countless ads on TV and in print as - well as listening to the pitches showering your ears from the radio.

These types of loan can fit will for many people as I am sure they do in certain circumstances but there are many caveats that you must be aware of and pay close attention to if you are considering a reverse type of loan.

There are many loan programs, over a dozen at the time of this writing, that are designed around the reverse mortgage concept.

Your first plan of action should be to seek out only those lenders who are offering a large selection of these types of loans for you to consider.

Be very suspicious of any lender who will only be willing to offer you a couple of choices as these are most likely in house loan packages that are designed for the lenders self interest. These loans may not offer you the best rates and terms available elsewhere on the market.

Reverse mortgage pitfalls need not to even occur if you are armed with the fact before seeking one of these loans.

Most often these types of loans are structured around a few basic requirements starting with your age. As an example, HUD requires you to be 62 while more conventional lenders will be willing to loan to younger people.

The main pitfall with this one is that the younger you are when the loan is made, the less interest you will be offered which can have dire consequences down the road.

Inflation! This ugly fact will never go away. As the cost of living increases year after year will your loan payment increase as well?

Your reverse mortgage contract must include some sort of cost of living adjustment. If it doesn’t where do you think your income will put you 10 years from now?

Another reverse mortgage pitfall factor that you must pay close attention to is your yearly taxes. These must be payed by you, the home owner. Have you figured those costs into your income levels 10 years down the road from now?

Keeping up your property. Yes, the lenders will require this. Expenses such as roofing, heating, air conditioning, plumbing and on and on will pop up from time to time and you need to factor in these costs over the years as well.

You must pay for all your housing insurance. Your lender will require up to the minute insurance coverage as they need to protect their investment. Again, make sure these costs are included.

Last but not even close to least is your utility costs. They will continue to rise as previously mentioned in the inflation factor. How much to you think you will be paying on your electric bill a decade from now?

The bottom line? These are just a few of the things you need to consider and talk over with your lender. There are more and you will find these online if you know where to look.

Add up all the costs you will be expected to pay over the course of the next 10 to 15 years and make sure your contract adjusts upward so the power you have in one dollar today is reflected with that same power a decade from now.

Reverse mortgage pitfalls? Yes and no. Be aware of what you are doing and this may work out beautifully for you. Remember, knowledge is power and it is up to you to empower yourself!

Finances

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