Marino on Money: November 27
This week, a viewer asked about reverse mortgages. Wednesday, I reviewed how reverse mortgages work. Today, I will discuss the types of reverse mortgages and some considerations.
There are 3 types of reverse mortgages.
1. Single purpose mortgages, which are offered by some state and local agencies.
2. Home equity conversion mortgages, which are federally insured by the U.S. Department of Housing and Urban Development, or HUD, and:
3. Proprietary reverse mortgages, which are private loans.
The size of a reverse mortgage is impacted by the borrower’s age, the home’s value, and the interest rate. The older you are, the more you can borrow against your home.
Here are some considerations.
Reverse mortgages are generally more expensive and carry higher interest rates than traditional mortgages. Also, in some circumstances, the lender can call the loan or reduce the amount of money available. This can happen if you fail to pay property taxes or insurance premiums, or move out.
Finally, your family must also be considered. Some children may not like the idea of their parents selling the family home. And, a reverse mortgage will definitely have an impact on inheritance.
This is a big decision, and reverse mortgages can be complicated. As always, seek qualified advice when making important financial decisions.
If you have a financial question for Ross, you can use the Marino on Money page.
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