Reverse mortgages are unique loans against an individual’s home equity. Rather than a home owner paying a lender, the lender actually pays the home owner and repayment of the loan is not required until the home owner passes or the house is sold. Despite their lucrative cash appeal and increasing popularity, however, reverse mortgages are complex and are only suitable for a small number of people.
The Weaver newsletter article, Take a Cautious Approach with Reverse Mortgages, outlines five factors to weigh when considering a reverse mortgage:
- How it works
- The mechanics of the loan
- Who qualifies
- How much money you receive
- Tax implications
A reverse mortgage may be an appropriate option for individuals with high equity and low cash, but due to the intricate nature, diligent research and professional advice can help minimize risks.