Samantha Taylor is a contributing writer and moderator of Mortgagefit.com forums. She specializes in mortgage and real estate field.
Scenario:
I am considering pros and cons of taking a reverse mortgage or refinancing my existing mortgage. I will be 70 in September, and the social security income is one source that I primarily rely on. I do have some savings which I’d like to keep intact in case I need it for medical purposes and the like. Now as I found out a few days ago, if I go for a reverse mortgage, that is going to cost me a lot compared to what I paid for an existing loan. The outstanding balance on the existing loan is around $25000. So which will be the best way to go for – Do a refinance or take out a reverse mortgage?
Solution:
At your age of 70 years, you may find it difficult to qualify for a refinance loan. This is so because the lender or the mortgage company would require you to have a steady flow of income along with a sound credit payment history. And, considering your income source, I guess it’s the social security income that you’re currently relying on.
However, when you go for a reverse mortgage, make sure that you’re paying off any old debt against your home or else you’ll have to pay it down with the proceeds obtained through the loan itself. Moreover, you cannot borrow beyond a certain level of your home equity if you’re going to take a reverse mortgage. This is because the lender offers a loan amount such that the interest on the loan can be included into the value of home equity.
Now, instead of taking a reverse mortgage or a refinance loan, you can also look out for a home equity line of credit that will allow you to withdraw cash as and when required within an allowable credit limit. But here again you will be required to have a certain income limit to get qualified for the loan. So, when it comes to qualifying for a loan, I think a reverse mortgage is the best option for you.
You can select an FHA-insured loan (HECM), a lender-insured or even an un-insured reverse mortgage. It is better that you do some loan shopping in order to compare the costs required for each type of mortgage offer that you are likely to qualify for. However, before you decide to choose a loan program, consider your monthly expenses and any investment option that you’ve been interested in. This will help you to decide whether you can afford to pay off the loan in case it becomes callable.
If you wish to discuss on reverse mortgage and related issues, feel free to ask questions and get the right suggestions through our community forums.
- Related Articles
- Related Q&A
- Colorado Mortgage Refinance Loans
- Free Online Mortgage Refinance Quotes: Providing Valuable Service to Consumers
- Best Mortgage Refinance Rates
- Mortgage Refinance Best Rates - To Compare And Get Low Rates
- Jumbo Mortgage Refinance
- Tips For A Mortgage Refinance In Ontario
- Mortgage Refinance- All your Financial Problems Solved
- Are You Considering A Home Mortgage Refinance? Here Is A Line Of Attack That Might Be Workable For You.




Florida FHA Mortgage, FHA Mortgage FLorida
By: Thomas Martin | 09/07/2009Using the FHA mortgage to purchase a Florida home can be the best decision you make as a Florida home buyer.
Finding the Best Fixed Rate Mortgage
By: Olivia Wilson | 09/07/2009Mortgage rates are starting to improve and while approvals are up a little this month it may turn out to be the perfect time to lock in to a fixed rate deal. To find the best fixed rate mortgage I would suggest seeking professional advice from a mortgage broker.
Florida FHA Mortgage, Florida FHA loan
By: Thomas Martin | 09/07/2009Florida mortgage applicants should understand the many advantages of the FHA mortgage loan programs. FHA loans were created to help increase home ownership. For the Florida home buyer the FHA program can simplify the purchase of a home, making financing easier and less expensive than a conventional mortgage loan product. Some highlights of the Florida mortgage program include:
How can FHA help me buy a Florida Home?
By: Thomas Martin | 09/07/2009FHA insured mortgages offer many benefits and protections to Florida homebuyers and homeowners that only come with an FHA mortgage.
Homeowners Swithcing From Tracker To Fixed Rates
By: Ruth | 09/07/2009A recent trend has seen homeowners in the UK switiching from tracker rates to fixed rate mortgages. Despite the presently historic low interest rates set by the Bank of England.
Identifying Best Mortgage Rates by Mortgage Experts
By: Sharon Samraj | 09/07/2009It is known that mortgage brokers come real handy, when one wants to buy a house. They help buyers acquire the best deals from lenders, from whom money is borrowed for buying the house, only to be repaid later at a fixed rate.
What You Should Know About Loan Modification
By: David Pit | 09/07/2009A loan modification is a renegotiation of your present loan on a property, e.g. your home. In order to put off a foreclosure due to a default on payment on a property, the lender and borrower have to compromise on the terms of their present agreement. How this situation came about will be discussed by means of an example of an average couple.
Reverse Mortgage Negatives
By: Leon Cote | 09/07/2009Reverse Mortgage Downside: The cash you get from a reverse mortgage isn't free cash. All banks and banks are in business to earn income. A reverse mortgage bank is not different. When they give you cash that is secured by a mortgage on your house, they have entitlement to be paid back what they lent you, and the interest on it. But, in the case of a reverse mortgage, the bank must wait for payments of any sort till you sell the home, refinance, or permanently leave the home (...
Adjustable Rate Mortgage for better management
By: Samantha Taylor | 07/07/2009 | MortgageLearn how to manage your mortgage well with adjustable rate mortgage or ARM. Find out what are the benefits of adjustable rate mortgage.
Avoid Foreclosure
By: Samantha Taylor | 15/06/2009 | MortgageThere are several ways to avoid foreclosure and loan modification is the best one. Find out how you can avoid foreclosure through loan modifications and the various ways by which your lender can modify your loan.
How to find out your home affordability
By: Samantha Taylor | 01/04/2009 | MortgageIf you wish to buy a home with a mortgage, you need to find out whether your monthly income is sufficient to help you pay off the desired loan amount. This will further give you an idea as to how much house you can afford.
Which Is Better – Fha Mortgage Or Conventional Loan?
By: Samantha Taylor | 12/03/2009 | MortgageIf you're a first time buyer looking for the best mortgage loan, you may try out FHA loans rather than conventional mortgages or 80/20 loans. FHA loans are comparatively easy to qualify for and the lenders are often more willing to work with you if you fail to carry on with the payments.
Should I Refinance Now or Wait for Higher Scores?
By: Samantha Taylor | 26/12/2008 | MortgageWhen market rates are low and are expected to go down further, you can apply for a refinance of your existing mortgage at 680 middle score. It’s not necessary to wait for higher scores because you may get the same rate of interest within a certain range of credit scores.
How Much House Can I Afford Calculator-check Your Loan Affordability
By: Samantha Taylor | 06/11/2008 | MortgageHow much house can I afford Calculator helps you to work out the monthly income you need so that you can afford to pay off a mortgage. It gives you an idea as to whether you can afford a mortgage and helps to figure out the monthly payment on your mortgage.
Does Apr or Annual Percentage Rate Include Pmi?
By: Samantha Taylor | 21/10/2008 | MortgageAPR or annual percentage rate includes upfront PMI charges along with loan processing fee, document preparation fee etc. The APR is usually higher than the interest rate on the mortgage. It is the effective interest rate which is calculated by taking into account the interest on the loan and entire costs of taking out the mortgage.
Is 30 Year Fixed Rate Mortgage Better Than 2/28 Arm?
By: Samantha Taylor | 22/09/2008 | MortgageA 30 year fixed rate mortgage with 5 year interest-only option is much better than 2/28 ARM with 5 year interest-only payment plan. The rate on the former will be slightly lower than the introductory rate of the ARM. Moreover, the 30 year loan offers only 1 payment adjustment as compared to the ARM.