Reverse Mortgages

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Reverse mortgages are when you borrow against your own home and it doesn't have to be paid back until you moce or pass on. These mortgages are only available if you are at least 62 years of age.

Reverse mortgages used to carry a lot of up front fees but that has changed making it better for the borrowers.

The initial insurance premiums used to be quite high for one of these mortgages, as much as 2%. Now there is a new option called HECM Saver which cuts that down to 0.01%. If you have a $400,000 home it would have cost you $8,000 now it would only be $40.

Banks are also cutting the fees. A lot of banks are paying half of the initial premium and waiving other fees as well.

The new fee structure could make reverse mortgages appealing to far more homeowners. Up to now the high upfront fees have turned off most seniors, the majority of borrowers use the proceeds to pay off a regular mortgage.

Now these mortgages are more "user friendly" and people are using them more and more.

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When it comes to reverse mortgages, make sure you get all of the information possible before you go ahead and sign any papers to take advantage of this.

I dont think that some people realize that by taking advantage of a reverse mortgage for extra income, that in the long run, you will not be able to leave your home to your children upon your demise.

Be sure to research all aspects of a reverse mortgage.