For borrowers, reverse mortgages offer a number of benefits — but they also come with their fair share of drawbacks, a recent Huffington Post article points out.
To start, the loan allows borrowers to tap into the rising value of their home, while providing greater self-sufficiency and comfort.
Historically, a reverse mortgage was fairly simple to obtain, making its accessibility a “pro” when weighing the advantages and disadvantages of the loan. However, as of April 27, the process for getting the loan has significantly changed.
Although the HuffPost writes that new laws may require some borrowers to set aside funds to pay for property taxes, home repairs and mortgage insurance premiums down the road, it incorrectly states that “credit checks are minimal” and that a borrower’s “credit score or monthly income are mostly irrelevant.”
It’s worth noting that borrowers will be subject to a financial assessment that takes into account their credit report and payment histories, among other financial information, following the recent changes to the reverse mortgage program.
Additionally, the article states that in order to qualify, everyone listed on the deed of the house must be at least 62 years old. However, the age requirement only applies to the borrower.
As for the drawbacks of the product, reverse mortgages require that the borrower remain in the home, maintain their home and keep property tax and insurance payments up to date. Additionally, “a reverse mortgage usually makes it impossible to leave your house to your children,” the Huffington Post writes.
To read the Huffington Post article, click here.
Written by Emily Study