Originally published at Forbes Repayment of a home equity loan balance may be deferred until the last borrower or non-borrowing spouse has died, moved, or sold the home. Prior to that time, repayments can be made voluntarily at any point to help reduce future interest due and to allow for a larger line of credit […]
The discussion of reverse mortgage costs has several moving parts. Which type of cost combination to choose depends on how you plan to use the line of credit during retirement.
Most current HECM reverse mortgages use an adjustable interest rate, which allows the proceeds from the reverse mortgage to be taken out in any of four ways or a combination thereof.
A mortgage’s effective rate is applied not just to the loan balance, but also to the overall principal limit, which grows throughout the duration of the loan.
Upfront costs for reverse mortgages come in three categories.
The requirements to become an eligible HECM borrower are numerous. Do you qualify?
Reverse mortgages have a relatively short history in the United States, beginning in a bank in Maine in 1961.
Before discussing how reverse mortgages can fit into your retirement income plan, it is worthwhile to first consider in greater detail the bad reputation reverse mortgages have developed.
If, after considering other housing options, you have decided to remain in an eligible home or to move into a new home, you may want to consider a Home Equity Conversion Mortgage (HECM) – more commonly known as a reverse mortgage – as a source of retirement income.
Reverse mortgages provide the ability to borrow a portion of your home equity without being required to repay the loan until the owner has permanently left it.