14
Currents
July 2019
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“ HAPPY 4 TH OF JULY”
Friday, July 5, 2019
National Bikini Day
the value of your home and allow you to borrow back
money against the market value. Let’s say that your
home, which currently has no mortgage, appraises at
$360,000. You choose to take $180,000 reverse
mortgage at 7% with $15,000 in closing costs, fees
and premiums. That is added on to the mortgage, so
you now have a $195,000 mortgage at 7%. It is
called a reverse mortgage because, unlike a conven-
tional mortgage where every month you are paying
down the principal, the principal on your reverse
mortgage increases every month based on that 7%
interest rate. Of course, you have received the
$180,000. If you are an astute investor able to earn
more than 7% on that $180,000, you may come out
ahead of the game. However, if you put it into a sav-
ings account earning 2%, you are losing money
every month. In addition, the home that you wanted
to leave to your children (and that your children were
anticipating inheriting) may have little or no equity by
the time you pass away. If there is no equity in your
home when you die, it is likely that your children will
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