The balance of reverse mortgage debt reached a new record high. Filings show reverse mortgage debt reached $3.72 billion in May. Boomers and seniors who are house rich and cash poor, or who hate the thought of downsizing are flocking to these loans to tap the equity in their home. They can elect to receive a lump sum or regular payments, drawing down equity they’ve built over the years. It’s kind of like a home equity line of credit (HELOC), but the rates are higher, and you don’t have to make a payment. While the loan can be repaid, it is normally not due until death, default, or sale. The challenge is, If you’re not making payments, the interest can rack up quickly. You may end up spending a lot more of your equity than you expected. Worse if you borrowed at peak prices and falling value of equity must be paid and the debt remains.
Before entering a Reverse Mortgage or HELOC agreement, consider calling me. It pays to thoroughly explore all your options going into your golden years.
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