Should You Use Reverse Loan to Buy a Car?

Are mortgage foreclosure rates linked to homeowners’ transportation costs? They are according to a recent study by the Natural Resources Defense Council (NRDC). The study found that the more cars households in a neighborhood have, the higher the probability of foreclosure.

The NRDC, a nonprofit that works to protect public health and the environment, examined data from 40,000 households in Chicago, San Francisco, and Jacksonville, Fla. The probability of mortgage foreclosure decreased in neighborhoods where residents weren’t as dependent on cars, after accounting for income.

Are You Paying Too Much to Drive?

Are you paying out too much of your income for transportation costs? The average American household spent about 17% of its income on transportation costs in 2008, according to the U.S. Bureau of Labor Statistics.

Reverse Mortgages and Transportation

You may have considered getting a reverse mortgage to buy a new car or pay off the one you currently have. Here are some things to consider before getting a reverse home mortgage.

• Reverse mortgages can be used for any purpose, even transportation costs. But make sure buying a car is really the best use of your money. Even if you think you can afford a luxury car, it might not be a wise investment on a fixed income. Look for a dependable vehicle that is less expensive.
• Are you struggling with constant repair bills for a vehicle that is way past its prime? If so, then it may be time to get a more reliable car or look into using public transportation more often.
• New cars begin depreciating the instant you drive off the car lot. If a reverse loan is used to pay for the purchase, consider buying a reliable used car instead of spending reverse mortgage proceeds on a new car.

Reverse Mortgage Guidelines

Talk with a reverse mortgage counselor to get the facts on borrowing money. You can also shop for quotes to get an idea of the costs involved with getting a reverse loan.

This entry was posted on Tuesday, February 23rd, 2010 at 7:19 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.