Watch out for these drawbacks of using a reverse mortgage to fund retirement.
The truth about reverse mortgages are far from ideal. In fact, there are a few reasons to avoid getting a reverse mortgage as part of your retirement plan. Most of these reasons revolve around the fact that this type of income stream is actually a loan against your home’s equity that has to be paid back.
Here are five reasons to think twice about getting a reverse mortgage: Read more
Is a reverse mortgage right for you?
Reverse mortgages have become the cash-strapped homeowner’s financial planning tool of choice. For decades, retirees looking to convert their biggest asset — home, sweet home — into income were forced to choose between either selling their house or taking out a home equity loan, which sentenced them to an unwelcome schedule of high-interest monthly payments.
Introduced in 1989, such loans enable seniors age 62 and older to access a portion of their home equity without having to move.
The bank makes payments to the borrower throughout his or her lifetime based on a percentage of accumulated home equity. The loan balance does not have to be repaid until the borrower dies, sells the home or permanently moves out. Read more