Reverse Mortgage to Buy a Car: 3 Considerations
If you're considering using a reverse mortgage to buy a car, there are a few things you need to take into account. Here are three key considerations to keep in mind.
1. The Loan Amount
With a reverse mortgage, you can borrow up to 60% of the value of your home. So if your home is valued at $100,000, you can borrow up to $60,000. That may not be enough to cover the cost of a car, depending on the make and model you're looking at.
2. The Interest Rate
The interest rate on a reverse mortgage is generally higher than the interest rate on a regular mortgage. That means you'll end up paying more interest over the life of the loan.
3. The Repayment Schedule
With a reverse mortgage, you don't have to make any monthly payments. The loan is repaid when you sell your home or die. That could be a problem if you want to sell your home before the loan is paid off. You may have to come up with the cash to pay off the loan or find a buyer who is willing to assume the loan.
Keep these three considerations in mind if you're thinking about using a reverse mortgage to buy a car.