Mortgages: Shift Your Home Into Reverse

Reverse mortgages, which are designed to help older folks stay in their homes longer, have never been very popular. Sure, a 74-year-old with a $300,000 house could get a lump sum or credit line of $180,000 or monthly payments of $1,203 as long as she lived in the house. But then she'd pay as much as $14,000 in upfront closing costs and another $15,000 or so in monthly fees over the life of the loan, according to AARP. (You can find your own numbers at aarp.org/ money/revmort.)

But with new lenders and underwriters moving into the market, expect these mortgages to get cheaper in the next year or two. In the meantime, folks can try to qualify for a less expensive, standard home-equity line first. Or they can try another new tack and get a mortgage from their kids. Circlelending.com, a Web-based company that helps arrange personal loans, has a new intrafamily reverse mortgage. For $3,999, the company does all the paperwork. Kids can loan their parents money against their inheritance. Parents can use that money to pay upkeep on the home, medical bills or living expenses. (The family sets its own interest rates.) It's cheaper than an arm's-length reverse mortgage and it keeps all that interest income in the family. The downside? Keeping it all in the family. If the kids can't keep up their parental support or want their money back, it could get ugly.

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