how does a reverse mortgage work,is it a rip off or does it have any benefits.?
by Mortgage Rates on Tuesday, November 9th, 2010 | 2 Comments
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A reverse mortgage basically allows you to retain ownership of the house and receive money, either lump sum or payments. The money received is basically a loan which is paid off either on your passing or the sale of the house. You never need to pay on it while you are alive and living in the house but it does accrue interest. You must be 62 or older to qualify for a reverse mortgage.
The major difference between a reverse mortgage and refinancing is income. For a reverse mortgage you don’t need to show or receive any income where as a refi you have to prove you can make the payments. With a reverse mortgage there are requirements to keep homeowners insurance and the house in good repair.
There is so much more to go into. A good loan officer should be able to help you better understand your situation and what the two options would look like. Please let me know if you have any questions.
It depends on whether you plan on moving in the next decade (I mean decade), whether you are desperate, whether you have a job and if you qualify (age 55 plus) and how much equity you have. This is a multi-layer analysis and the AARP has lots of info.
Be advised that reverse mortgages have a lot of fees and if you have a lot of assets avoid this.