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Finance: What is a Reverse Mortgage? 6 Views


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Description:

With a reverse mortgage, payments go in the opposite direction of a normal mortgage, where you pledge your home as an asset, and receive $ each month.

Language:
English Language

Transcript

00:00

Finance allah shmoop What is a reverse mortgage All right

00:07

people let's start with a normal mortgage You put one

00:09

hundred grand down borrow three hundred grand and are the

00:12

proud new owner of this baby in palo alto california

00:15

You make payments for thirty years at five percent interest

00:18

and then you retire their debt free So that's a

00:21

mortgage but what's a reverse mortgage Like one of these

00:25

egg trump Well kind of at least financially the payments

00:29

go in the opposite direction of a normal mortgage Like

00:32

you're old you just want to live out your remaining

00:35

years with the basic comforts Shower seats stair lift high

00:39

absorption adult diapers You own all of your home No

00:43

mortgage on it You paid it all off The home

00:45

is now worth a million box Nice shoebox There you

00:49

can do a reverse mortgage pledging your home is an

00:53

asset and basically just receiving a payment of l say

00:56

five grand a month from that reverse mortgage and you'll

01:00

get to deduct interest costs as you go Justus if

01:03

it were a normal mortgage well after forty months you

01:07

you know croak in that time period you've taken out

01:09

Forty times five grand or two hundred grand in loans

01:12

plus some interest and you sell your home for a

01:15

cool million Rather your heirs dio So what happens now

01:19

Well they just take the million bucks from the sale

01:21

write a check for two hundred grand and change to

01:24

the bank to pay off the reverse mortgage that you

01:27

had accrued while you were you know wasting away to

01:29

nothing and your heirs end up happy like they miss

01:33

you But you know a free stair lift Who are 00:01:37.997 --> [endTime] you

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