If I get a reverse mortgage will I deplete most of the equity out my home? I want to move and be a renter?
Christopher asked:
Would I have the best gains with my current 30 fixed at 8 % or put myself in a better position by getting a reverse mortgage for now, knowing that I am going to sell in four years? I am 72 and my payment is 488.00 excluding taxes and insurance. The cost of the reverse mortgage is 7 grand, and the interest rate can go as high as 14.8%.
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Would I have the best gains with my current 30 fixed at 8 % or put myself in a better position by getting a reverse mortgage for now, knowing that I am going to sell in four years? I am 72 and my payment is 488.00 excluding taxes and insurance. The cost of the reverse mortgage is 7 grand, and the interest rate can go as high as 14.8%.
June 23rd, 2009 at 6:11 am
Reverse mortgage is for people wanting to use the equity in their home and still live at their current residence. This is a way to stay in your home not designed for you to move to another residence, You would be better off to sell or rent your current home and move into a rental situation if that is your goal and save the seven grand. I believe this is not the option for you based on your facts above. Good Luck
June 26th, 2009 at 5:27 am
A reverse mortgage is, in effect a sale. It will be the very last financial transaction you make on your home. It will belong to the lender, you will not be able to sell it. You will not be able to move, without giving it up entirely. You will not be able to access any more of it’s equity.
Reverse mortgages are only an extreme last resort, and usually they are an awful deal. Be very careful.
June 26th, 2009 at 7:01 am
Reverse mortgages are ALWAYS a bad deal. Even if you wanted to stay in the house, you would be better off getting a REGULAR mortgage for 80% of the homes value, paying of any existing mortgage, and putting the rest in a decent mutual fund. Then you can draw from the mutual fund to make the mortgage payments and pay yourself what the reverse mortgage would pay. At any given time, you will have more in the mutual fund plus equity than you would have with the reverse mortgage.