Deferred Interest

Banks don't give away reverse mortgages for free. For example, let's assume you started off with a $100,000 reverse mortgage loan balance and five years later, you sold the home. With the money you get from the buyer, you would have to use about $130,000 to repay the reverse mortgage. That example is hypothetical - using an interes rate of about 5%.

In other words, payment of interest to the bank is deferred until the loan is repaid.

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