⚠️ What You Need to Know About Reverse Mortgages
A reverse mortgage is a type of loan that uses your home equity to provide the funds for the loan itself. It’s only available to homeowners who are 62 or older and is aimed at folks who have paid off their mortgage (or most of it anyway).
The bank is lending you back the money you’ve already paid on your home but charging you interest at the same time.
For some folks, the appealing part of a reverse mortgage is that you don’t make any monthly payments to the lender or pay the interest until you sell your home. Seems easy enough, right?
But here comes the cringeworthy truth: If you die before you’ve sold your home, those you leave behind are stuck with two options. They can either pay off the full reverse mortgage and all the interest that’s piled up over the years or surrender your house to the bank.
So, it might seem like a reverse mortgage is a helpful cash-flow option for people in their retirement, but these mortgages put seniors and their heirs at financial risk.