A lifetime of debt is nearly unavoidable

Published 7:00 am Friday, June 5, 2015

Debt. In this day and age it’s almost impossible to avoid some level of it throughout life, unless you decide to move to a secluded cabin and live off the grid.
It’s not until you reach adulthood that the daunting weight of debt falls on your shoulders. It gets worse if you decide to go to college, or receive specialized training to enter a career of your choice.
Even if you were lucky enough to avoid some kind of higher education debt, you will eventually want to buy a car, boat and most of all, a home.
The American dream has long been home ownership.
And certainly there’s no greater joy than owning that home outright and free of debt.
Recently there have been a lot of commercials that attempt to entice responsible adults back into the fold of debt. They focus on reverse mortgages.
Many of those commercials will sell you on the benefits of taking advantage of the equity in a home. But few will share the disadvantages of these loans.
First, here’s where a reverse mortgage may come in handy. Say your retirement plan is in need of some adjustments, but in the meantime cash is short. A reverse mortgage, also known as a loan, could then be taken out on the equity, or the value above it’s potential sale price, on the home. Other positives include heirs will never be responsible for paying back the loan, the money can be used for any expense and the money can be accepted as a lump sum, monthly payments or as credit.
The downside is they are costly to take out due to higher closing costs, higher interest rates and the extra money could negatively affect your eligibility to receive Medicaid and SSI benefits.
Additionally, the homeowners are still responsible for keeping property taxes and insurance premiums paid, otherwise they will have to pay the reverse mortgage back before the typical deadlines.
These are just some facts about reverse mortgages. If you are considering one, be sure to conduct more research before signing any paperwork.

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