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Reverse Mortgages 101

Fixed Rate Reverse Mortgage versus An Adjustable-rate Reverse Mortgage

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With a fixed rate reverse mortgage:

  • You must take all the money when you take out the loan.
  • Interest charges on the whole amount start immediately.
  • The interest charges are set for the life of the loan.

With an adjustable rate reverse mortgage:

  • You can also take all the money when you take out the loan. However, you are not obligated to. You can also take the money in montlhy payments, or through a line of credit that permits you to take money as necessary.
  • Interest only starts when you take money.
  • Interest rates can fluctuate - perhaps greatly depending on the terms of the loan. Rates have been known to rise by as much as 10 percentage points over the life of a loan.

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