Many people take out a reverse mortgage loan thinking that it's going to last them forever. Indeed, the reverse mortgage is typically designed to last until the home owner sells the home or passes away. That's part of why it's designed for seniors who are not likely to continue remaining in their homes for years upon years.
However, as a reverse mortgage borrower, you should know that there are different lengths of time for which the reverse mortgage can be obtained. And you should also be aware of the fact that the longer that you take out the loan for, the more that you're ultimately going to owe at the end of the home loan.
This is caused by the way that interest accrues on the reverse mortgage loan. It keeps adding up over time and increases steadily which causes you to owe more money as more time passes. For an example of this, take a look at the numbers highlighted in this recent Kiplinger report which compares a 10-year reverse mortgage loan with a 20-year reverse mortgage loan.
This doesn't necessarily mean that it's a bad thing for you to take out a reverse mortgage for the duration of the time that you live in your home. It's just a fact to be aware of as you get older and start planning your move to a retirement community, nursing home or the home of a family member. Sooner may be better than later in some cases.
Question of the Day: How long would you ideally expect the life of your reverse mortgage loan to be?
