A lot of senior citizens these days are opting for a reverse mortgage at a very early age. But what they fail to understand is that what seems to be like a simple loan is a way complex scheme of drowning people in debt.
First, let’s collect enough AARP reverse mortgage information and know how it functions.
An AARP reverse mortgage is a loan in which a senior citizen keeps his home equity as collateral. The person does this in two cases- first when he needs money to pay the house bills and secondly when he must pay the debt of a loan he has taken. By opting for a reverse mortgage, he need not worry about paying any money if he continues to own the house.
But it is not as simple as it seems. Here is some AARP reverse mortgage information you must know:
Firstly, getting a reverse mortgage is difficult these days as the banks only give this loan after seeing the bank balance of the person and if you are a retired person who does not have much saving, then you might not be eligible for the loan.
You may think that there is no chance that you will ever lose your house, but the fact is that you can only own your house if you can pay the house bills and property taxes. If you are retired, then it would be almost impossible for you to pay these bills regularly and eventually you will lose your house to the bank.
Once the bank owns your home, it will sell your house, and whatever money it recovers, it will use it to pay your loans and interest charged during the mortgage period.
If your house does not sell for an amount equivalent to your loan and the interest, the government bears the loss.
In case if your home takes much more than the amount you need to pay the bank, you or your heir might get the money.
If a married couple decides to take this loan, it is advised that they are both on loan. This will ensure that if one dies, the other can continue to stay in the house, without having to worry about being evicted.
If you are thinking of opting for the AARP reverse mortgage, make sure that you take up the mandatory financial counseling by the Department of Housing and Urban Development, to get proper AARP reverse mortgage information. Make sure that you keep this AARP reverse mortgage information in mind before getting into it.
It is best that you calculate all your risks and do not jump for the reverse mortgage unless it is your only option to solve your financial crises.