BBB Marketplace Survival Guide
Whitney Quick

BBB Tips: Reverse Mortgages

Posted Wednesday, June 15, 2022, at 4:21 PM


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    Did some research on these as a possible additional lever to pull should the retirement glide path encounter future extreme unplanned turbulence causing a recalculation of cash flow balance.

    Simply appears to roughly parallel a traditional secured loan, using the home as collateral, interest charges racking up on money received, with an effective balloon repayment due when the mortgage-holder leaves the house.

    Freely-available specific information was disappointing and found to be quite limited, but it seemed the general theme was -

    One does not get access to all the equity in the house. Depending on age and the related expected remaining lifespan, current interest rates, and a few other factors, it seems only about 40-60% is on the table for payout.

    Interest rates were suggested to run about 1-2% above current conventional home mortgage rates.

    Somewhere in all the noise and confusion seems to be mortgage insurance (PMI) costs, as part of the upfront costs and/or interest rates charged.

    Whether this perception is right, wrong, or otherwise - agree that it's a way to get money, albeit coming across as an expensive way - so filing it here as a path of absolute last resort which is hoped to never get travelled...

    -- Posted by fxpwt on Thu, Jun 16, 2022, at 9:03 AM