Many senior homeowners 62 or older find a reverse mortgage attractive, and why not? This financial tool is a loan program insured by the Federal Housing Administration (FHA) wherein you could convert your home equity into cold cash.
Also called home equity conversion mortgage (HCEM), this loan allows you to choose on a fixed monthly payment or line of credit and even has a lump sum option. The loan is repaid if you move out, turn delinquent on tax and/or insurance payments, or if you sell the house.
It also becomes due if the house deteriorates badly into disrepair or once you’ve passed away. Upon death of a borrower, the house would be sold. The remaining amount after repayment goes to the heirs of the deceased.
Complexities Bug HCEMs
As it could be plainly seen, a reverse mortgage like any loan program can be complicated and confusing. Its complexities could be problematic especially for a deceased borrower who has a surviving spouse whose rights to the property needs to be protected.
Regulatory agencies like the Consumer Financial Protection Bureau, in fact, maintain that HCEMs are complex financial products hard for ordinary consumers to fully understand. To make matters worse, some unscrupulous lenders have scammed many seniors lured by misleading advertisements about reverse mortgages.
The most vulnerable ones to these scammers are seniors who are under foreclosure threat. This sting works by artificially inflating the value of your home with the assistance of a conniving appraiser. Once the reverse mortgage is approved, the scammers trick the seniors into transferring the title to them. Thus leaving the poor borrower with no home and no funds from the reverse mortgage.
Sell to Cash in on Home Equity Fast
In the final analysis, there’s little sense to go for a reverse mortgage once you have already built equity. With an HCEM, what is basically happening is that you’re borrowing from your own pocket. The supposed lender, meanwhile, sits pretty, charges hefty fees for processing the mortgage, and gradually nibbles on the hard-earned equity you’ve accumulated in your home.
Given all these, what may be more sensible is to sell your house once you’ve built enough equity on it. A sale will give you full and immediate access to your home’s equity.
Financial Flexibility Is Better
You’ll gain the advantage of financial flexibility on how to use the proceeds from the sale. This is advantageous especially if your current house is already too big for your needs. As a senior “empty-nester,” you’d realize that the property taxes and maintenance costs of such a large house have become uneconomical, prohibitive even.
Selling your house and downsizing to a smaller and more affordable home is a more logical step than a reverse mortgage in this case. Instead of buying a small house, you can also opt to just rent. This gives you extra money for interest-generating bank deposits or for investing in more secure, income-generating financial instruments.
Lease Purchase Option
At House Sold Easy, we can offer another option—a lease purchase program wherein a tenant-buyer in our network rents your house with an option to buy after a certain time period. We can lease-purchase your home “as-is” and for top dollar if you’re flexible on terms.
Also if you would just like to sell house fast, we can buy your home as-is quickly and pay you in cash. Explore the options you have instead of a tricky reverse mortgage. Call us at 635-525-1566.