Alexis Leondis of Bloomberg reports that a growing number of seniors are using reverse mortgages to pay for things they might never be able to afford on their own. Leondis describes reverse mortgages this way:
Reverse mortgages are for people aged at least 62. The loans, which lenders charge fees equal to as much as 6 percent of a home’s value, allow borrowers to use their home equity to get cash tax free. After the borrowers die, or move, the lenders are repaid when the house is sold.
Like every other personal financial decision, the question of whether or not a taking out reverse mortgage is the right decision is a deeply personal and circumstantial one. The AARP Foundation’s Reverse Mortgage Education Project has many tools folks can use to find out if a reverse mortgage is appropriate to their particular circumstance.