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Nov 16, 2022 · A reverse mortgage is a loan based on the paid-up current value, or equity, in your home. Unlike a conventional mortgage, your lender pays you — in monthly payments, through a variable line of credit or in a lump sum. You don't have to repay the loan until you sell your house, move or die.
- Is this your forever home? Reverse mortgages are expensive (see the third question). If you or your spouse would want to move later on — or if your home isn't suitable for aging in place — you're better off selling and downsizing.
- How much can you borrow? Your maximum loan size is based on your home equity, your age (the older you are, the more you can borrow) and interest rates.
- Do you know what it will cost? Mortgage insurance is 2 percent of the appraised value of the home or the federal loan limit, whichever is lower. Closing costs are similar to those of a traditional mortgage.
- What will you do with the proceeds? After you've sweated years to accumulate equity in your home, it's courting disaster to get your hands on the money without a clear plan for it.
Feb 15, 2011 · A reverse mortgage is a loan against your home equity that you don't have to pay back as long as you live there. Assuming you have enough equity in your home, you could use a reverse mortgage to pay off your existing mortgage.
Apr 19, 2023 · To get more general information about the pros and cons of reverse mortgages, visit the AARP website. The Consumer Financial Protection Bureau offers a helpful reverse mortgage discussion guide and advises consumers considering taking out a reverse mortgage to consider all other alternatives.
Jul 3, 2024 · A reverse mortgage allows you to supplement that diminished income without digging into savings. You don’t have to make monthly payments, either, which could help free up room in your monthly...
- Peter G. Miller
May 9, 2024 · Reverse Mortgage Pros and Cons: Everything You Need to Know. by Rachel Christian, CEPF®. Senior Writer. Updated May 9, 2024. Reviewed by Molly Moorhead, CFP®. Getty Images. Reverse mortgages can help older homeowners free up cash in retirement by borrowing against the value of their home.
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Jun 13, 2008 · Reverse mortgages are for people aged at least 62. The loans, which lenders charge fees equal to as much as 6 percent of a home's value, allow borrowers to use their home equity to get cash tax free. After the borrowers die, or move, the lenders are repaid when the house is sold.
