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Bonnie Said:

Home Equity VS Reverse Mortgage?

We Answered:

Reverse Mortgage:
http://en.wikipedia.org/wiki/Reverse_mor…
A reverse mortgage (known as lifetime mortgage in the UK) is a type of loan available to seniors (62 and over in the US), used as a way of converting their home equity (the value of the home, minus the amount of any existing mortgages) into one or more cash payments while retaining ownership of the property (continuing to live there) and avoiding monthly payments. Repayment of the loan is deferred until the borrower is no longer living in the home.

A reverse mortgage borrower may encounter many financial hazards in taking out a reverse mortgage. First, reverse mortgages are very expensive while promising an uncertain amount of benefits. For example, a typical reverse mortgage may provide to the consumer a $300 per month payment with a monthly compounded interest rate of 1%. Over the course of ten years, the borrower will receive $36,000, but by that time she will owe almost $70,000-almost twice as much as she has received.

http://en.wikipedia.org/wiki/Home_equity…
A home equity loan
A home equity loan is a type of loan in which the borrower uses the equity in his home as collateral. Montly payments are required.