Financial Q&A: Reverse mortgages can work for many still paying off their homes
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Q: I am 78 and have a 30-year, 6-1/8 percent interest mortgage with 10 years left on it. My income is from Social Security. I'm thinking of a reverse-interest mortgage. I owe $103,000 and my house is worth $220,000 to $250,000. My concern is that my daughter have something when I leave. Is there a difference in terms and interest in reverse mortgages? Which ones are considered the best?
A: While the good news is that you have built up substantial equity in your house, says financial planner Debra Neiman, author of "Money Without Matrimony," that overhanging mortgage most likely will disqualify you for a reverse mortgage.
In order to qualify, you generally must own your home outright, meaning that you have paid off any mortgages that use the house as collateral, she says.
But those who work in the reverse-mortgage industry disagree. Many reverse mortgages are used to first pay off existing liens on a homes, they say.