BOSTON (CBS) – We’ve all seen the commercials, now with Henry Winkler, for reverse mortgages.
You borrow against the equity in your home and the money does not have to be paid back until you die or want to move.
These mortgages are not for everyone. Ideal for a cash-strapped elder who wants to stay in their home! An individual who is on a fixed income and living in their own home and wants to stay in their home may find a reverse mortgage gives them the cash they may need to make repairs or modifications so they can continue to live there.
There are no restrictions on how the money is used. And many retirees are going on a shopping spree, traveling with the money, or helping their kids get out of debt.
To be eligible for a reverse mortgage you must be at least 62 years old and own your home although you can still have a mortgage.
At 62 and healthy you can look forward to another 30 years in retirement and you have just tied up your largest asset. Before you sign on the dotted line be sure you talk with a financial planner to see if a reverse mortgage is right for your situation. In addition, HUD now requires extensive counseling and budget planning before they will sign off on the loan.
There is no free lunch here. There are upfront fees. I used the median listing price of a house in Boston of $350,000. You would be entitled to a monthly payout of up to $1,033 or a lump sum of up to $216,000.
As an alternative you might just consider selling your home, pocketing the profit and moving into a smaller less expensive place or even elder housing or assisted living facility. But moving is a major change and change is hard at any age.
You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
Subscribe to Dee’s Money Matters newsletter here.