Are Reverse Mortgages Still a Thing?

Yes! If you want to stay in your home and you need cash to pay ordinary living expenses, a Home Equity Conversion Mortgage (HECM) could be a good option.  For the average retiree, home equity represents about 66 percent of their, so it is a huge potential source of funds.

       First, you can get an HECM at a good rate and tap nearly 60 percent of your home equity. You can do that as a lump sum, monthly payments, or as a line of credit that only has interest on withdrawals.

       You must pay the property taxes, insurance, and maintain the house, and if you do, you can stay in the house as long as you like. That means even if the housing market goes down, or interest rates go up, you can stay in the house on the terms of the loan. The only time the loan is due is when you die or move. However, the lender can and probably will foreclose on the house if you fail to pay taxes, insurance, and maintenance.

       In addition, the withdrawals on the credit line are tax free. You won’t have to sell investments to pay for expenses.

       There is an upfront cost to getting a reverse mortgage of about $1,500 per $100,000. So it isn’t inexpensive, but it does let you turn your house into cash to cover expenses.


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