According to Wikipedia, A reverse mortgage is a mortgage that is typically secured over a residential property, which allows the borrower to access the unencumbered value of the property. Reverse mortgage loans are typically promoted to older homeowners and usually do not require the typical monthly mortgage payments making them attractive to older homeowners who may need better cash flow at this time in their lives, especially if they haven’t adequately saved for retirement. Although the homeowners are still responsible for homeowners insurance and property taxes, reverse mortgages allow older homeowners to access the home equity they built up in their homes now rather than wait until they need to move or sell or die.
So before you or your parents dig in to the lure of a reverse mortgage, think carefully and consider consulting with a tax attorney or an accountant to determine what is best for your family.
Photo credits by: North Bay Capital.
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