I’ll give you a “real world” explanation of how Reverse Mortgages really work.
For example, how would you like to have a lender provide you a portion of your home value (52% for age 62) and the interest on this loan never has to be repaid unless you or your estate wants to.
If you want to repay the loan in order to move or at death, then the appreciation on the home is YOURS and the loan will be repaid from the home sale.
The way I structure RM’s, the lender’s interest rate is roughly 5%-6%.
The home appreciation for the past several years has been roughly 4%.
The following examples are ballpark figures.
If a 78 year old has a home value of $600k, the lender will provide a loan for $369K.
After one year the loan amount will grow to roughly $387.5K ($369k x 5% interest) but the home value will grow to $624k ($600k x 4%).
The following year the loan amount interest will grow to roughly $4067k ($387.5 x 5% interest) but the home value will grow to $649k ( $624K x 4%).
This cycle continues until you can no longer live in the home.
The point is the home value amount should be growing faster than the loan balance amount.
What could you do with the loan amount; pay off current mortgage, pay for medical attention, buy a 2nd home condo in a warmer climate, spend this TAX FREE cash in any manner you want! l
Why not call me with your age, home value and I can tell you what to expect!!!