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Old 09-07-2017, 03:27 AM
g_nicks g_nicks is offline
Join Date: Jun 2017
Location: New York
Posts: 31
Default Re: Is Reverse Mortgages Useful?

Reverse Mortgage can be a good idea if you keep the emotions aside and look at it purely from a financial perspective. Let us look at the negatives and positives surrounding Reverse Mortgage, so that you can decide whether it suits you or not.

Negatives surrounding Reverse Mortgage:
Society Pressure - Home is generally looked upon as a sacred place. If you talk about liquidating your primary home, it is not taken well by anybody especially children. Children see it as giving away their family home and wealth.
Higher Costs - Most banks charge a higher interest rate on reverse mortgage compared to a normal home loan and the valuation of the house is also in the hands of the bank. You may not get the real market value.
Positives of Reverse Mortgage:
Better Monthly Cash Flow - Many retired people have assets in the form of house properties but do not have reasonable monthly income to support their monthly and medical expenses. Reverse mortgage is a perfect tool for such people.
Tax Benefits - In India, payments from Reverse Mortgage are made tax free. So, you don't have to worry about any tax payments.
RMLeA (Reverse Mortgage Loan-Enabled Annuity) - You can get even higher monthly payments if you go for RMLeA. A Reverse Mortgage Loan Enabled Annuity (RMLeA) is an advanced Reverse Mortgage product in which the bank instead of paying you directly, pays one lump sum amount to an insurance company. The insurance company then makes monthly payments to you based on actuarial pricing.
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