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TERMINOLOGY
There are a few reverse mortgage problems that you will need to be aware of if you are shopping for a reverse mortgage. Here are some of the most common reverse mortgage problems to look out for.
1. Wrong Payment Option
Reverse mortgages will often offer you multiple payment options. For example, you could choose to receive a regular monthly payment for an extended period of time. You could also choose to utilize a line of credit arrangement. You will need to evaluate your personal needs to determine which type of payment method would be best for you.
2. Fees
In some cases, you will have to watch out for unnecessary fees and costs that are associated with a reverse mortgage. You should expect to pay something for an origination fee, mortgage insurance, and a service fee. However, if you see many other types of fees, you should be a little bit skeptical. Be sure to ask your lender what all of these fees are for before agreeing to the loan.
3. High Interest Rates
The interest rate that you pay on the loan is going to cut into the amount of equity that you have available to you. You should not agree to paying a high interest rate, because it will lower your monthly payment significantly.
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