Reverse Mortgage Flexible About Prepay
Believe it or not I get many people call me wanting to get a reverse mortgage with the intent of actually making payments on the mortgage.
I know everyone has good intentions and you've heard about the best laid plans.
Let's face it most people are getting a reverse mortgage because a need exists for money. If the need for money exists for those on fixed incomes (generally) chances are there won't be excess down the line to make mortgage payments.
Regardless, a goodly portion of my potential customers ask if the reverse mortgage company will ding them if they make payments on the loan.
The fact is you can make payments anytime you like on reverse mortgages and not be in jeapardy of some form of pre-payment penalty.
A big reason many people ask is they have the desire to use the interest write-off. The reverse mortgage is just a mortgage so, like a forward mortgage, you can use that write off the same way.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
You have to make payments. This would be a good reason for someone to prepay the reverse mortgage.
Of course, when prepaying the mortgage one must consider the tax laws. They always cramp the average person's style and this is no different. Since most people finance closing costs in a reverse mortgage these costs must be paid prior to getting any interest write-off.
So, the government has rules for this too.
Of all the costs originally financed into your reverse mortgage one of the largest was the lender's loan origination fee. This fee could have been two percent of the home's value or even more.
At least you have the lender's fee as a write-off while paying off closing cost prior to getting the interest write-off. Please check with your CPA on all tax related matters.
I know everyone has good intentions and you've heard about the best laid plans.
Let's face it most people are getting a reverse mortgage because a need exists for money. If the need for money exists for those on fixed incomes (generally) chances are there won't be excess down the line to make mortgage payments.
Regardless, a goodly portion of my potential customers ask if the reverse mortgage company will ding them if they make payments on the loan.
The fact is you can make payments anytime you like on reverse mortgages and not be in jeapardy of some form of pre-payment penalty.
A big reason many people ask is they have the desire to use the interest write-off. The reverse mortgage is just a mortgage so, like a forward mortgage, you can use that write off the same way.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
You have to make payments. This would be a good reason for someone to prepay the reverse mortgage.
Of course, when prepaying the mortgage one must consider the tax laws. They always cramp the average person's style and this is no different. Since most people finance closing costs in a reverse mortgage these costs must be paid prior to getting any interest write-off.
So, the government has rules for this too.
Of all the costs originally financed into your reverse mortgage one of the largest was the lender's loan origination fee. This fee could have been two percent of the home's value or even more.
At least you have the lender's fee as a write-off while paying off closing cost prior to getting the interest write-off. Please check with your CPA on all tax related matters.
posted by Debt Consolidation Loan at
7:09 AM
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