Believe it or not I get many people call me wanting to get a reverse mortgage with the intent of actually making payments on the mortgage.
I know everyone has good intentions and you've heard about the best laid plans.
The question I have to ask is where is the money going to come from to make those payments. After all, reverse mortgage customers generally get reverse mortgages because they lack dollars. There is typically no reason this will change.
It makes almost no matter. People continue to ask if the lender will charge extra or allow these borrowers to make early payments.
FHA sets the rules for reverse mortgage lending. FHA is clearly borrower favorable in that you can make payments at any time with out monetary repercussion.
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.
The thing to understand about the interest write-off and the reverse mortgage is one can only get that write-off the same year in which the interest is paid. You see, when you aren't making payments on the mortgage you don't get the write-off.
You gotta make mortgage payments to get the write-off. This in itsef is an enticing reason for a customer to at least ask the question.
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.
So, there is an order to that which parts of the mortgage can get paid.
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.
The origination fee is a big write-off. Make sure you run this stuff by your CPA. They are more abreast than I and things change. - 14915
I know everyone has good intentions and you've heard about the best laid plans.
The question I have to ask is where is the money going to come from to make those payments. After all, reverse mortgage customers generally get reverse mortgages because they lack dollars. There is typically no reason this will change.
It makes almost no matter. People continue to ask if the lender will charge extra or allow these borrowers to make early payments.
FHA sets the rules for reverse mortgage lending. FHA is clearly borrower favorable in that you can make payments at any time with out monetary repercussion.
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.
The thing to understand about the interest write-off and the reverse mortgage is one can only get that write-off the same year in which the interest is paid. You see, when you aren't making payments on the mortgage you don't get the write-off.
You gotta make mortgage payments to get the write-off. This in itsef is an enticing reason for a customer to at least ask the question.
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.
So, there is an order to that which parts of the mortgage can get paid.
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.
The origination fee is a big write-off. Make sure you run this stuff by your CPA. They are more abreast than I and things change. - 14915
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