Avoid the Financial Trap of a Reverse Mortgage
If you and your spouse are both over 60 and your house is completely paid off, you may have considered getting a reverse mortgage to take advantage of the equity you’ve built up in your home. A reverse mortgage is a product that allows you to borrow a lump sum amount based on your house value. You do not need to make any payments, the loan and the interest is applied to the lien against your property and it’s only due when you leave the house, either through a sale or with your death.
Once the house is sold and the debt is paid, there could likely be no additional money left. With the accumulating interest, a $250,000 reverse mortgage could cost you $750,000 after 15 years. While this might work well if you have no one that you want to leave an estate to, there are better options to borrow for the equity in your property.
A Home Equity Line Of Credit (HELOC) would give you a cheaper interest rate and allow you to keep ownership of the remaining value of your house. A HELOC is simply a regular line of credit that secured by your house. You would need to make a regular interest payment, though if you absolutely needed to, you could get around that by borrowing a larger amount than what you need, and using that additional credit to pay the interest.
Even if you assume that you will live in the house until you die and you have no beneficiaries, there could be a time that you need to move. If your health forces you into a care facility, the sale of your home could leave you with no money left when you might need it the most.
Think of these scenarios if you’re contemplating a reverse mortgage. While it sounds good to get your equity paid out and not have to make regular payments, for many it could be the worst financial mistake they make.
Stay as far away from these scum bags pushing this seniors ripoff .They will sell your home from under you through a power of sale as soon as they can. With CHIP Home Income Plan when you die your beneficiary’s will have to pay the total outstanding debt within 120 days.If they can not come up with the funds Chip will sell your home through power of sale and you can bet they have people just waiting to put in low ball bid to take you house for nothing. Do not believe the bull they try to tell you.
Agree with Bill this is a terrible idea.
Another scum bucket rip off, have you seen the idiots they get to do their commercials. stay away from these thieves!!!!!
Hello,We just talked to reverse morgage people today,is there not a contract stating interest rates just like the bank.Thanks
I asked my lawyer if he recommended CHIP. He asked me to get a blank contract from Chip, so that he could go over the terms and the fine print conditions. Chip refused to send me a blank contract. They said that they did not have any blank contracts!!?? I asked them if they expected me to sign over my house to them with a handshake? They NEVER answered back.
It appears that if you sign on quickly, without seeing a lawyer first, then you will get robbed because of their high interest rates. It appears that they are basically lending you money at a very high interest rate, and are taking your home as collateral!!
As your debt to CHIP grows, when you owe them the value of your house, they then take your house and sell it for the debt you owe them. No, you will not keep your house until you die. Chip will evict you from the house that CHIP said you still own and that you can keep until you die!!
Check the FINE PRINT if you can get a blank contract from Chip!!
Remember, if you deal with any insurance company, the only right you have when you sign their contract, is the right to take them to court!!