Reverse Mortgages Revisited, Negative and Postive Views
Q: Q: You recently presented a negative view of reverse mortgages. Isn't there a positive view?
M.Q., Panama City, Fla.
A: There is. Darryl Hicks of the (not unbiased) National Reverse Mortgage Lenders Association wrote to us: "You state that the proceeds from a reverse mortgage can be received as a lump sum or regular payments. What you failed to mention is that the most popular option chosen by seniors is to receive funds from a reverse mortgage as a line of credit that they can draw on whenever the need arises."
He also pointed out that reverse mortgage interest rates are competitive with regular mortgages, and that the home equity loans we suggested aren't perfect, either: "While a home equity loan may be less costly to obtain, compared to a reverse mortgage, the homeowner is still obligated to make a monthly payment." A reverse mortgage "enables a senior to convert part of the equity in his or her home into tax-free income without having to sell the home, give up title or taking on a new monthly mortgage payment."
Source: The Motley Fool
So as you can see from the above article, home equity loans versus reverse mortgages don't offer the same benefits. Like stated above, with a reverse mortgage credit line your proceeds will gain interest and you can access those funds at anytime. You won't have to a pay monthly interest fee like a home equity loan for as long as you have the loan outstanding, with the reverse mortgage you can receive the monthly payments if you chose.
Each reverse mortgage lender and program might differ a little bit with interest rates and how credit lines and monthly payments can be acquired. I can assist you with any questions and provide you with comparisons and figures regarding each reverse mortgage option. Please contact me with any questions.
-- Grant
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