Reversed Mortgages have grown in popularity throughout the Madison area and entire state of WI. For people 62 and older who need to increase their retirement income, pay for a re-model, put cash towards health issues, or just want to pay off an existing home loan one of these programs may be an excellent option for people looking for a home mortgage in Madison Wisconsin
It's important to research these programs and make sure you are working with a lender who is familar with all of the ins and outs and will present them all to you in an easy to understand manner. Reversed mortgage programs have gotten a bad rap in the past due to poor lending practices which caused many elderly couples feeling they got ripped off or misled. And in some instances this was indeed the case.
The good thing is now with the tighter mortgage lending regulations all across the boards, it's much more difficult for shady lenders to scam individuals looking to take advantage of these programs. Still though, it's very important to find a lender you can trust and will answer all your questions in a straightforward manner.
How does a Reversed Mortgage work?
In a nutshell a reversed mortgage will take some of the current equity you have in your home and turn it into cash for you to use to spend on whatever you deem fit. The lender provides you with money that you do not have to repay for as long as you reside in the home. If you sell the home or pass away the money is paid back to the mortgage lender.
Income restrictions and taxes are usually not incorporated in these programs. This leaves any Medicare or Social Security benefits untouched (which is a good thing). The house remains in your name but there is no obligation for the home owner to make monthly loan payments on the home.
Sound too good to be true? You're right. It's not all blue skies and green lights. As is the case with any loan program there are a few negatives:
- In the vast majority of programs the interest rates are variable, not fixed. So the rates you receive will fluctuate depending on how the market goes.
- Reverse Mortgages can gobble up the equity you have in your property. This will mean less of an inheritance for your surviving family members when you die;
- You are still responsible for paying insurance and property taxes and keeping the home in good condition. Not paying property taxes or dumping your home owners insurance will quickly default the loan. The title remains in the home owners name, so it's that person on the chopping block if property taxes are not payed or the home is left to shambles.
- Lender fees can be all over the map. Origination fees, service fees, closing costs etc can be set by the lender. So make sure you are getting the best possible deal with the lowest possible fees incorporated into the program (this is where are many of the less than stellar lending practices take place, so make sure you aren't getting blindsided with fees that don't really need to be there);
- Writing off mortgage interest will be a thing of the past when you sign into a Reversed Mortgage loan. In some cases if the home loan is paid of entirely or partially then mortgage interest can be written off on tax returns;
So yes, there are some downsides to the Reverse Mortgage programs, but for many folks the positive features of these loans outweigh the negatives. If you are strapped for cash or simply want more at hand in case of a medical situation or any other type of emergency, these options can be worth looking into.
Just remember to read all the fine print and ask questions. Make a list of questions and write them down on a piece of paper as you think of them. Reference this sheet when you sit down with a lender or speak with him or her on the phone. this way you know you have all your bases covered and can feel more confident in your decision.
From Spooner to Lake Geneva to right here in Madison, WI retirees and people approaching the golden years are signing off on Reverse Mortgage programs. The key, of course, is to find a qualified Madison WI mortgage company that is professional and honest and will not soak you with fees and upfront costs.
This was article originally posted at wisconsinstatemortgage.com
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We are a madison wi mortgage lender with low rates and top notch service and support: http://wisconsinstatemortgage.com
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