Home Equity Conversion Mortgage (HEMC) known more popularly as reverse mortgage is a concept being widely used and liked by consumers across the United States. People with homes of their own think that reverse mortgage is of great benefit to them financially. But this actually cannot be generalized and may not be applicable or suitable to all. It is therefore very essential to know the reverse mortgage pros and cons in detail before going in for it. Since this has become such an important issue there are already a lot of reviews both good and bad by the media. If you surf the internet you will also come across a lot of reverse mortgage information.
What exactly are the benefits and advantages or pros of reverse mortgage? Well, it firstly does away with monthly installment or mortgage payment. The resident can continue staying in the same house mortgaged. All the consumer needs to do is accept and follow the terms and conditions laid down. The other benefit is that of getting an additional income tax waiver. Any consumer can apply for it and the pas credit history is not a criterion for being eligible. The interest to be paid is as good as the equity rates or traditional rates of interest in the market. The best part of this is that there are no charges in case the client wants to prepay off the mortgage. Coming to the cons of reverse mortgage, the first one that comes to my mind is that the up front fees charged is higher than any of the other finance schemes. One major drawback is that the consumer gets tied down and cannot freely use his equity elsewhere. The interest paid does not give the consumer any tax relief until the loan amount is due. In case any of the terms and conditions are not followed for some reason by the consumer, he has to pay off the entire mortgage amount immediately. It eventually affects the savings and the equity for future generations.