U.S. News & World Report rolled out a special reverse mortgage resource last week, walking borrowers through the potential benefits and risks associated with the loans.
The site describes the different types of reverse mortgages — including the federally backed Home Equity Conversion Mortgage and proprietary products — and how prospective borrowers can qualify.
Among the benefits, the publication lists the ability to access cash to pay off debts and fund everyday household expenses, the fact that borrowers maintain home ownership, and flexible repayment options. Drawbacks, according to U.S. News & World Report, include the origination and maintenance fees, growing interest, tax and insurance costs, and the potential for a smaller inheritance for children.
The magazine also offers tips on how to identify the best reverse mortgage professional for a borrower’s particular situation. Nicholas Maningas, an originator with Gateway Mortgage Corp., told U.S. News & World Report that homeowners should think twice before picking a partner based on costs alone.
“The main cost difference between lenders will be the origination fee,” he told publication. “Cost is one thing, but you have to consider the expertise and professionalism of the person you’re dealing with. Will the lender meet you face-to-face? Will they personally advise you and customize the loan to your situation? For such an important decision, it can be worth the investment to get the higher level of service.”
In addition, the piece explores the differences between a reverse mortgage and a home equity loan. Andrina Valdes, executive vice president for Cornerstone Home Lending, told U.S. News & World Report that borrowers should take a look at multiple options, including a home equity loan, before making a final decision.
“Adjustable-rate mortgages often scare people, but the ARM features in a HECM can create more options and let the borrower use their equity more wisely,” Valdes said. “A well-informed borrower makes better decisions.”
Check out the full report in the publication’s Loans portal.
Written by Alex Spanko