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would you consider a loan that pays you?
Been thinking lately, what if you were retired and owned your home outright but needed extra cash flow...would you ever consider one of those reverse mortgage things? Seems kinda complicated, but maybe useful? Curious how others feel about it.
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"Seems kinda complicated, but maybe useful?"
Yeah, my parents looked into one a few years back when they retired. Here's what we found:
- It can definitely help with monthly expenses if you're tight on cash flow.
- But the fees and interest rates were higher than we expected.
- Also, it reduced the equity they'd leave behind, which mattered to them.
In the end, they decided against it and opted for downsizing instead. Might be worth comparing both options before jumping in...
The higher fees and interest rates are the part I’d want to quantify rather than judge from the monthly payment alone. A useful comparison would be the loan’s projected total interest and fees over several time periods, alongside the likely cost and equity impact of downsizing or using a home-equity line of credit.
A HELOC may look cheaper initially, but it can have variable rates and usually requires monthly payments, while a reverse mortgage can defer repayment but steadily reduce equity. I’d also check whether borrowing or receiving the proceeds could affect eligibility for means-tested benefits, since that might outweigh the apparent cash-flow benefit.