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Which way do I go - refinance or take reverse mortgage?

I shall be turning 79 in January and supported only by my social security income. I have had talks with lenders and came to know that if I take a reverse mortgage, I need to pay $12,000 in closing costs and also the payoff balance on my loan which is about $25,000. What should I do? Should I take the loan or do I think of refinancing the current mortagage?

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

As you are relying only on your social security income, so I think qualifying for the refinance will be a bit tough compared to getting the reverse mortgage.

Like | Dislike | Share | Posted: Thu, 11/23/2006 - 20:01 | Post subject:

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Agnes,

Lenders usually consider the income and credit score of borrowers before approving a loan. As such, lenders will take into account your social security income and allow to take a reverse mortgage. But doing a refinance may be difficult for you. This is because lenders need to see that you have steady source of income which should be large enough to cover the loan payments each month.

A reverse mortgage can be the right choice for you as there is no need to pay contractual payments on the loan. Also, the loan is called when you plan to move out of the house, sell it or after your death. The loan is repaid only after it is called and the lender can charge a total debt amount equal to the vale of the home and not more than that.

Thanks,

Sara

Like | Dislike | Share | Posted: Thu, 11/23/2006 - 21:26 | Post subject:

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Agnes,

The closing costs on a reverse mortgage are much higher compared to that of any other home loan. One way to deal with the costs and get a lower cost loan is to shop for the three kinds of reverse home loans and then compare their costs. You can also consider taking out a home equity line of credit but then you also need to qualify for it on the basis of your income.

I personally feel that a reverse mortgage will be the better option in your situation as compared to refinance or home equity line of credit. Know How a reverse mortgage works from our section on this topic.

Thanks,

Caron.

Like | Dislike | Share | Posted: Fri, 11/24/2006 - 03:17 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Agnes,
All the advise you have so far is exactly correct. You cannot qualify for
an equity loan. You do qualify for a Reverse Mortgage and the good news is
you do not need any up front money,as all closing cost can be rolled into the
loan. Be good to yourself:call a Reverse Mortgage Lender today.

Like | Dislike | Share | Posted: Sun, 11/26/2006 - 11:37 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Sure, the closing costs are high, but weigh them against what you would pay a realtor to SELL your property then when another home is purchased, the buyer will pay the "hidden" realtor fees, again. These realtor fees will far outweigh the financed closing costs associated with a reverse mortgage.

Like | Dislike | Share | Posted: Mon, 11/27/2006 - 05:18 | Post subject:

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