Moishe Alexander on reverse mortgages

What is a reverse mortgage?

It is similar to a home loan but instead of making payments to the lender, the lender makes payments to you.

The amount you can borrow depends on many things including your home’s value, your age, the outstanding balance on your mortgage (if you have one), the going interest rate at the time you take out the reverse mortgage, etc. As a general rule, the older you are, the lower interest rates are and the higher your home’s value, so the more you can borrow. – There are a number of ways you can take the moneys

1. As a line of credit
2. In a lump sum
3. In monthly payments for the rest of your life

or some combination of all three.

Loan payments are tax-free and don’t affect your Social Security benefits.

You don’t have to repay the loan until you die or move out of your house.

If the value of the home declines and is not enough to cover the amount you’ve borrowed plus interest, that’s the lender’s problem.

Neither you nor your heirs are responsible for anything beyond the house-sale proceeds; however, you will not be leaving the “full” value of your home to your heirs (your, the borrower is not necessarily giving up “all” the equity in your home with this product – it depends on the size of the loan relative to the value of the home and how long you stay in your home after you take out the reverse mortgage..

You must be at least 62 years old to obtain a reverse mortgage. The older you are, the more cash you can get.

There are some down sides to taking out a reverse mortgage.

The costs of taking out a loan can be substantial, but are usually linked to the size of the reverse mortgage loan and not the value of your home.

You will not be leaving the value in your home to your heirs.

Lenders will only finance a portion of your home’s value.

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