Con...you blow all your savings and spend all your equity.
Pro...fast cash.
Save your equity...
Answer by :
Susan N On Date
2007-11-27 21:27:12
Pros:
Fico scores and income are not taken into consideration.
Age and equity are the determining factors.
Instead of making a payment of a mortgage, the homeowner collects payments according to the terms they agree on which can be lump sum, monthly or annually.
The swing in income is two-fold since the homeowner pockets the money that they would have had to make their mortgage payment with, as well as the payment coming to them from the equity in the home.
Can be used effectively for a foreclosure bailout.
The lender only maintains a lien against the property - they do not take ownership of the property.
Heirs can still maintain their share in the property.
Heirs and children do not have to go out of their ways to help retired parents with mortgage payments.
Cons:
Loan to Value amounts are low, so there must be considerable equity int he home. LTV's average in the 40s.
Maturing events trigger execution of the lien: In this case, if the homeowner dies, or moves out of the home for at least 6 months continuously, then the property must either be refinanced, sold or have the lien placed on it by the lender paid off.
