CBS News tackles the pros and cons of reverse mortgages

For many Americans, the expectations and actual realities of retirement planning are sometimes shocking and surprising. So while a senior over 62 might be looking to reverse his mortgage, there are pros and cons to consider, according to a newly published article from CBS News.

“Many Americans look forward to a peaceful and financially independent retirement,” reads the column. “And if they do the right thing early in life, they’ll be in a safe position when they finally decide to end their career. But make a plan for a successful retirement.” and actually enjoying it are two different things.Sometimes high spending and cash shortages are inevitable, which is why a reverse mortgage makes sense for some older homeowners. if there is.”

Launch new debt-based lending vehicles as some potential reverse mortgage borrowers may consider such products after paying off full or substantial amounts on long-term traditional mortgages The column says that shouldn’t be taken lightly. Still, there are some scenarios where a reverse mortgage is an attractive option for certain seniors.

There are three main “advantages” that I’ll cover in this column.

“Freed-up equity can help you pay off debt, pay off bills, or complete home repairs. Having extra cash is always helpful, but a reverse mortgage allows you to do just that.” written in the column. “Unlike traditional mortgages, monthly payments on the loan balance are not required. [And finally,] If the homeowner finds themselves in such a precarious position, a reverse mortgage can help pay off the balance on the mortgage and prevent possible foreclosure. “

The column also lists three “cons” for potential borrowers to consider.

“Closing expenses and other fees may eat up some of the profits you plan to use and will not be reimbursed,” it says. “These numbers are the collateral damage of taking a reverse mortgage. [Number two,] It reduces the cash value of your home. Whatever the home was worth before the reverse mortgage was taken, minus the mortgage amount, fees, and closing costs. This is an important consideration for people planning to leave a home (and their property) to their family after death. “

The third “disadvantage” applies primarily to borrowers who are eligible for other forms of government assistance.

“While it won’t add to your annual tax (reverse mortgages aren’t considered income), it may negatively impact your eligibility for other assistance programs like Medicaid,” the column says. is written. “Consider the potential impact before you act.”

Read the article on CBS News.

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