Tuesday, May 14, 2013

Evaluating the Reverse Mortgage Set Amount and Varying Amount Loans

When comparing the Reverse Home loan set attention amount and varying amount loans, there are a lot of factors to consider what choice will be the best for you financially. The set attention amount choice has been very popular over the past few years, simply because attention rates are set, but there are many disadvantages of taking generally that is set with a reverse mortgage.

The varying attention amount reverse mortgage loan has a disadvantage, which you might have guessed, it is an adjustable amount product and the loan's amount can be unpredictable. But there are many advantages to the varying amount reverse mortgage that you may want to consider when looking at the best choice that fits your need.

The set attention amount loan has one distinct advantage, attention rates are set over the life of the loan, but that is also the disadvantage as well. If you were to choose the set attention amount loan choice, you must take a group sum payout, there are no other options with the set amount loan. The only reason you would want to use this reverse mortgage product is if you are going to use all the cash at once or paying off the mortgage currently on your home. For example, if you take out a group sum, but don't use all the cash at once, then you are just paying attention on money that is sitting in a bank account.

Unless you use all of the cash upfront, then you may want to consider the varying amount loan because it is more flexible and offers many options. The set attention amount reverse mortgage only comes with the HECM Saver product. In April of 2013, HUD stopped allowing the HECM Standard with the group sum choice.

The varying amount loan has one distinct disadvantage, attention rates are varying over the life of the loan, but that is also the advantage as well. With the varying amount loan you have the choice of taking out a group sum, opening a line of credit or receiving a set monthly payout for the rest of your life or any combination of these. With the set attention amount choice the attention starts to accrue from the time you take out the loan, since it only comes as a group sum choice.

On a varying amount loan, if you choose the set monthly payout or line of credit, the attention only accrues on the money that has been paid out to you. In the long run the attention accrues much more slowly. The varying amount reverse mortgage comes as the HECM Standard or HECM Saver.

For example, if you are 70 years old and the value of your home is $200,000 and you take out a set attention amount group sum loan of $109,000, which is the max payout, your balance would be approximately $181,000 in 10 years. But if you were to take the set monthly payout choice, your balance would be $110,000 in 10 years, roughly $71,000 less attention over the same period of time.