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August 21, 2020
Reverse mortgages are loans — a type of home equity loan.
You are borrowing your own home equity while retaining home ownership. However, unlike a traditional home equity loan, there are no monthly mortgage payments. The money you borrow and interest accumulated is repaid when you no longer reside in the home.
If you qualify, reverse mortgages enable you to:
Reverse mortgages CAN be a really great way to increase your financial options. In fact, according to a recent survey by Ohio State University, the vast majority of people who are able to secure these loans are very happy with their decision.
Other studies suggest that more than 90 percent of all households who have secured a reverse mortgage are extremely happy that they got the loan. People say that they have less stress and feel freer to live the life they want.
However, there are times when a reverse mortgage is a really terrible idea. Here are few instances of reverse mortgage mistakes — times when getting a reverse mortgage might be a colossally bad idea:
Reverse mortgages can be great when you hope to remain in your home for as long as possible.
However, you can still leave your home to your heirs and they will have the option of keeping the home and refinancing or paying off the mortgage or selling the home if the home is worth more than the amount owed on it. There are numerous potential Estate and Retirement Planning benefits to a Reverse Mortgage – see Innovative Uses of a Reverse Mortgage for more information on these options.
When you apply for a reverse mortgage, you are required to undergo a financial counseling session. The counselor will help you assess the long term impact of the loan and make sure that if you get a reverse mortgage, you will be able to afford your existing lifestyle and potential medical costs now and well into the future.
Deciding whether or not a reverse mortgage is right for you can be complicated.
Luckily there are online tools to help you assess the pros and cons of these loans.
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