Lots of reverse mortgage potential customers contact me asking if any stipulations exist precluding making early or even monthly payments on the mortgage.
I know everyone has good intentions and you've heard about the best laid plans.
Let's face it most people are getting a reverse mortgage because a need exists for money. If the need for money exists for those on fixed incomes (generally) chances are there won't be excess down the line to make mortgage payments.
It makes almost no matter. People continue to ask if the lender will charge extra or allow these borrowers to make early payments.
The truth be known reverse mortgage lenders, and more particularly FHA, have no qualms with borrowers making payments of any kind prior to the end of the mortgage.
A big reason many people ask is they have the desire to use the interest write-off. The reverse mortgage is just a mortgage so, like a forward mortgage, you can use that write off the same way.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
In order to get the write-off the borrower must make payments. It's at least a good reason to ask about repercussions.
The thing about getting this interest write-off is that there exists an order in which one can apply payments when prepaying a reverse mortgage. The vast majority of borrowers stick the closing costs into the mortgage. These costs must get paid prior to payments applying to interest.
Just keep in mind the order in which early payments are applied.
A benefit of paying costs first is the origination fee which was financed into the loan. This is one of the biggest closing costs when you closed on your mortgage.
Check with your accountant on these items. Laws change. That's why you pay them the big bucks.
I know everyone has good intentions and you've heard about the best laid plans.
Let's face it most people are getting a reverse mortgage because a need exists for money. If the need for money exists for those on fixed incomes (generally) chances are there won't be excess down the line to make mortgage payments.
It makes almost no matter. People continue to ask if the lender will charge extra or allow these borrowers to make early payments.
The truth be known reverse mortgage lenders, and more particularly FHA, have no qualms with borrowers making payments of any kind prior to the end of the mortgage.
A big reason many people ask is they have the desire to use the interest write-off. The reverse mortgage is just a mortgage so, like a forward mortgage, you can use that write off the same way.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
In order to get the write-off the borrower must make payments. It's at least a good reason to ask about repercussions.
The thing about getting this interest write-off is that there exists an order in which one can apply payments when prepaying a reverse mortgage. The vast majority of borrowers stick the closing costs into the mortgage. These costs must get paid prior to payments applying to interest.
Just keep in mind the order in which early payments are applied.
A benefit of paying costs first is the origination fee which was financed into the loan. This is one of the biggest closing costs when you closed on your mortgage.
Check with your accountant on these items. Laws change. That's why you pay them the big bucks.
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