How does a reverse mortgage compare with a home equity loan?
— Sharrie E. DEAR SHARRIE: If your parents plan to stay in their home at least five years, a reverse mortgage can be a good deal. The obvious big disadvantage of a home equity loan is the monthly payment. If your parents are short of income now, how can they afford home equity loan payments? A reverse mortgage need not be repaid until the last co-borrower sells the home, moves out or dies. Then the home is sold, the reverse mortgage is paid off and the remaining equity goes to the heirs. Yes, the upfront reverse mortgage fees seem high. I suggest dividing that fee by the life expectancy of the youngest co-borrower. Let’s say it is 10 years. Now a $1,200 annual loan fee to receive many times that amount tax-free each year seems reasonable. DEAR BOB: My wife and I soon plan to buy our first home, probably a townhouse — she is expecting our first child in May. As you suggest, we were pre-approved for a mortgage. The lender showed us how we can qualify for a larger mortgage if we take an
