Reverse Mortgages - How Much Will You Pay?

On the surface, it might seem as if reverse mortgages offered a free service - you spent years building up your equity, these loans gradually filter it back to you. But just like every other form of home financing a reverse mortgage will carry a rate, and that rate might end up costing you more than you think.

The costs of reverse mortgages

You will receive your money from reverse mortgages in one of several ways:

• A lump sum payment
• a monthly allowance for a specified number of years
• or as a line of credit accessible at your discretion.

Hmmm...sounds a lot like the possibilities available for equity financing - and indeed these loans carry similar rates to average second mortgages. But while reverse mortgages do indeed cost the home owner significant amounts of equity, its not cash and the loan doesn't have to be repaid until the sale of your home.

Whats the real benefit?

With reverse mortgages you can borrow against your equity and use the money however you see fit, and the money doesn't need to be repaid until you sell your home. Ok, but the real benefit comes to those people who can legally access this type of mortgage - homeowners over 62 years of age. LIke other beneficial retirement benefits these mortgages offer tax-free cash without having to ever make a return payment, and the amounts are more than enough to handle regular living expenses as well as steep medial or prescription drug bills.

No matter what they strip from social security, they will never be able to take away your home - now you can put home mortgages to work for you throughout your golden years!

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