Advantages of a Reverse Mortgage over Other Mortgages
1. Less documentation and minimum requirements. There are very minimal documents that need to be submitted. The most basic requirement includes the following:
a. You should be a U.S. Citizen
b. You should be at least 62 years old.
c. You must live in a home for at least 6 months within the duration of a year.
d. You must receive counseling from an accredited reverse mortgage counselor.
2. No monthly payments. You don’t have to worry about monthly payments, both for the interest and principal amount of your reverse mortgage loan. The balance of the loan will only be due if you die, move out of your primary residence, sell the house, fail to pay your property taxes, or fail to maintain the good condition of your house.
3. Cap on the interest rate. There is a cap on the interest rate to avoid the lender from over-charging.
4. No credit check or proof of income. Unlike other mortgages, which will ask you to submit a proof of income, reverse mortgage will not require you to submit anything like that. There is no check on your credit history or a minimum requirement on the annual income. You simply need to meet the above mentioned requirements and your application will be evaluated.
The Disadvantage of Reverse Mortgage
The only disadvantage of a reverse mortgage is the expensive cost that goes with it. Compared with the $10,000 cost of other loans; you are expected to pay an estimated amount of $15,000 to cover the different fees involved with it. Nevertheless, these fees are unavoidable and the advantages it provides are beyond its disadvantage.
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