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Understanding Costs in Reverse Mortgages
A reverse mortgage is a financial product available to seniors looking for additional income in retirement. It is a great option for people who meet the requirements to supplement income. There are, however, some unique circumstances in reverse mortgages that need to be understood. Of course, your best option, is to talk directly to a local, licensed Reverse Mortgage Advisor to get your questions answered and determine if a reverse mortgage is right for you.
Explain why I don’t pay principle and interest on my reverse mortgage.
With a Reverse Mortgage, you don’t pay principle and interest like a traditional loan, and are only charged interest on the loan balance. Additionally, the interest isn’t paid until the loan repayment date. With a traditional loan, the person is responsible for repayment. With a Reverse Mortgage, the property is responsible for repayment, as it is a non-recourse loan. That means the lender cannot come to the borrower or their heirs to receive payment.
Do I earn interest when I take the Line of Credit pay out option?
No, interest isn’t earned like it would be on a savings account. Consider it more line an available line of credit on a credit card- if the line isn’t used, ... more
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