Reverse Mortgage – Be Sure You Need It Before Applying For One

Reverse mortgages used to be considered last resort of desperate retirees who needed to borrow against their home equity in order to pay for medical expenses. With home prices across country rising at astonishing rates, more and more retirees, aged 62 and over, are taking out reverse mortgages to fund better retirement living. A reverse mortgage works more or less opposite way from a conventional mortgage; borrower receives payments from lender in form of a lump sum, a line of credit, or monthly payments. The amount borrowed constitutes a lien against home must be repaid upon death of borrower, or when home is resold. There are costs associated with a reverse mortgage, however, and potential borrowers should be aware of these when considering taking out such a loan, particularly if borrower takes out a line of credit.

All loans have fees associated with them. There are home appraisals, paperwork fees, mortgage insurance fees, and additional “points” added to cost of loan. In general, costs of taking out a reverse mortgage are higher than those associated with a traditional mortgage. There are several reasons for this, including fact that time period for receiving repayment of loan is indefinite, typically depending on how long borrower lives. This uncertainty is added into loan in form of additional fees.

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Young People & Debt

Most young people who are just starting out are facing an uphill battle against debt. Credit cards, student loans and car payments are just a few of items that young people are facing nowadays.

Credit cards are number one cause of debt for people age 18-30. It starts in college with card number one, which then progresses into five or six credit cards to buy new clothes and beer. The average college student graduates with an average of $4500 in credit card debt. This situation is multiplied by higher interest rates on those college cards.

Credit card companies, smart people that they are, lesson restrictions on college students getting credit cards in exchange for charging a higher interest rate on those cards. One of first things young people can do is try to find lower interest credit cards. Sites, such as http://creditbus.com, allow users to search for and apply for low interest credit cards. By obtaining a lower rate, card holders can get more principle paid off sooner.