How to Choose the Best Lifetime Mortgage Provider
When it comes to buying a house, there are many options and questions that must be answered. What type of mortgage should you get? Is a lifetime mortgage right for me and which lifetime mortgage providers are out there? Are there any risks? The following article will answer these questions and more so that you can make the best decision possible when deciding on your next home purchase!
Risks of Lifetime Mortgages: There are many risks associated with a lifetime mortgage and you should be aware of them before signing on the dotted line. The biggest risk is that if you live past your life expectancy, then the money will have to come out of your estate when it’s passed down.
You could also lose all or most of your home equity in this situation since there would not be enough income from Social Security benefits to cover expenses. Another big concern is that companies may offer incentives for people who take out these loans like discounts on property taxes but they might just end up costing more than what’s saved. Finally, interest rates can fluctuate which means monthly payments could go up unexpectedly over time making it almost impossible to budget correctly.
Dangers of FHA Loans: With a Federal Housing Administration (FHA) loan, you can only borrow up to 96.75% of the home’s value and must pay mortgage insurance for as long as it takes to repay that money back. The interest rates are typically higher than conventional loans since they take into account your credit score which is usually lower due to an increase in debt from borrowing so much cash at once. If you end up defaulting on these types of mortgages then the government will foreclose on your house but collect nothing because there isn’t really any equity left after all this time!