A Quote by Jean Chatzky
Unlike other loans, a reverse mortgage doesn't have to be repaid until the borrower moves out of the home or passes away.
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While a reverse mortgage can indeed be a viable way to generate income, it is very important to understand that after you take out a reverse mortgage, you will still be responsible for paying the property tax, the insurance premium, and all the maintenance costs for your home.
Because the fees associated with a reverse mortgage are high, such loans make sense only for borrowers who expect to live in their home for a number of years.
A consolidation makes sense only if you can lower your overall interest rate. Many people consolidate by taking out a home equity line loan or home equity line of credit (HELOC), refinancing a mortgage, or taking out a personal loan. They then use this cheaper debt to pay off more expensive debt, most frequently credit card loans, but also auto loans, private student loans, or other debt.
A reverse mortgage is available to anyone who is at least 62 years old and owns a home outright, or has a small mortgage balance remaining.
Both HUD and the Department of Justice began bringing lawsuits against mortgage bankers when a higher percentage of minority applicants than white applicants were turned down for mortgage loans. A substantial majority of both black and white mortgage loan applicants had their loans approved but a statistical difference was enough to get a bank sued.
If you can't afford the upkeep of your home, it makes no sense to do a reverse mortgage. You will just end up having to sell eventually when you realize you can't afford the home, and whether you have any equity left after the sale depends on the size of the reverse loan that must be settled.
Normally, banks record profits on loans only as they are repaid, whether they securitize the loans or hold them on their books.
In the subprime mortgage industry, bankers handed out iffy loans like candy at a parade because such loans meant revenue and, hence, bonuses for executives in the here-and-now.
Debt is always repaid, either by the borrower or by the lender.
When a bank calls in a loan, it obviously hurts the customer in question. But it also adversely affects other banks that have lent to this borrower. They are now less likely to be repaid and so can't as readily lend to their own customers.
Except for a handful of banks that just keep a handful of their loans in portfolio, on their balance sheet, every other loan that's originated in the United States - whether from a bank, mortgage company, mortgage broker - is sold into the secondary market.
Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I'm the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.
Redlining went beyond FHA-backed loans and spread to the entire mortgage industry, which was already rife with racism, excluding black people from most legitimate means of obtaining a mortgage.
Student debt is crushing the lives of millions of Americans. How does it happen that we can get a home mortgage or purchase a car with interest rates half of that being paid for student loans? We must make higher education affordable for all. We must substantially lower interest rates on student loans. This must be a national priority.
If you pay off your mortgage before retirement, you take a huge financial load off your shoulders. You also become eligible to take out a reverse mortgage once you turn 62.
If I'm a bank, and I'm making risky loans, I have an incentive, if I can, to make those loans using other people's money: in other words, to make highly leveraged loans.
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