By Admin on Jun 29, 2008 in Renting & Real Estate
unbelievable asked:
With a reversed mortgage you can get up to 40% of the market value of your house in cash, if you are over 60 years old. What percentage of interest is calculated on this amount? Is it the same as a first mortgage, or by what is the interest calculated?
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With a reversed mortgage you can get up to 40% of the market value of your house in cash, if you are over 60 years old. What percentage of interest is calculated on this amount? Is it the same as a first mortgage, or by what is the interest calculated?
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Usually its high….7-8+%. Before setting up a reverse mortgage, talk to your bank about a HELOC. Depending on your age and mortality, you may find that the loan interest ends up eating up most of the equity in your house in the end. Personally, I think reverse mortgages should only be considered only as a last resort.
P&M | Jun 30, 2008 | Reply
You are off on a couple of areas. First you must be 62 yrs old and BOTH/ALL on the note must be this age. Otherwise only the one that is of age can be on the note. Should something happen to this person the one that was not would either have to purchase the property or sale it. This can be devastating to all concerned. Next you need to have “at least 40% equity” in the property but they will go much higher than 40% of the value. You would be wise to take the payment option instead of the full payout option. The main reason being as the value of the property increases you will be able to keep getting payments. By taking the lump sum you are pretty much getting all you can.
Another option is the HELOC but you will have to make payments. Unless you have the ability to do this I would stick with the Reverse.
Consult both a Mortgage Broker that specializes in the Reverse Mortgage and a Certified Financial Planner to see all of your options.
Gregg N | Jun 30, 2008 | Reply