Where can you turn if you're retired and strapped for cash? When you've exhausted all other possibilities, you may hear pitches to tap into your home's equity by securing a "reverse mortgage."
With a conventional mortgage, you pay the bank. With a reverse mortgage, the bank pays you. You can then use the money to bail yourself out of other debts, help finance your grandchildren's education or pay for unforeseen expenses. Eventually, however, you or your heirs must repay the amount borrowed under the reverse mortgage.
While that sounds like a reasonable option, reverse mortgages aren't for everyone. Use discretion and a healthy dose of common sense before you erode your most valuable asset. That's why reverse mortgages should be a "last resort" for retirees, especially if you don't expect to stay in your home much longer.
How reverse mortgages work
When you obtain a typical mortgage, you receive a lump s...(register to read more)
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