How the Reverse Mortgage Credit line works

A reverse mortgage pays off current liens on a seniors home, and other equity that is left over is available to the senior in the form of a credit line.

The equity that is available in a credit line grows each year. The growth for the FHA reverse mortgages is half a percent higher than the current rate for the loan. So if the rate of the loan is 4.75%, the growth-rate of the credit line is 5.25%.

Because of this, a higher rate loan might be more appealing to a senior with a large initial credit-line. The difference in growth over the life of the loan is something to seriously consider.

Credit lines can be used for anything, and the money is tax free.


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