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A reverse mortgage is a type of mortgage that allows you to tap into your home's equity without having to worry about making payments back to the lender. This loan can be beneficial, but here are a few wrong reasons to do a reverse mortgage.
1. Family Member Advice
Many times when you get older, you will get plenty of advice from family members. Your family members might want you to use this so that you can afford to live comfortably without using up other sources of savings that they could inherit later. Instead of listening to a family member, you might want to consult a financial advisor or mortgage expert.
2. Take Advantage of Interest Rates
Although you want to get a low interest rate when you do a reverse mortgage, you should not take out a reverse mortgage simply to take advantage of low interest rates. This needs to be a decision that is in your best interest financially and should not be influenced by outside factors. For example, if you are doing this so that you do not have to rely on anyone else financially, this can be beneficial.
3. Avoid Cashing in CDs
Many retired individuals have a lot of their money tied up in CDs. If you are afraid to cash in your CDs, you should not take out a reverse mortgage to avoid doing this. This amounts to paying interest on a loan and risking your house just so that you can avoid cashing in your CDs.
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