Problemyou are 62 years old and your house appraises for, Ask an Expert

Accounting

Problem:

You are 62 years old, and your house appraises for $450,000. A bank is willing to give you a reverse mortgage at 50% LTV with a 6% fixed contract rate. You choose an option to receive equal monthly payments over a period of 10 years.

Required:

Question 1: What will these payments be?

Question 2: If you choose to move after 5 years, what will you owe the bank?

Question 3: If the home appreciates at 1%, how old will you be before your loan balance exceeds the value of the home?

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168770

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