Cash Out Refinance vs a Reverse Mortgage

Both the cash out refinance and the reverse mortgage can provide you with a way to access the equity in your home. However, they both have a few key differences from one another. Here are the basics of the cash out refinance and the reverse mortgage. 

Receiving Your Money

One of the biggest differences between these two types of mortgages is in the way that you receive your money. With the cash out refinance, you are going to receive a lump sum of money all at once. You will then be able to pay off your existing mortgage with the money and then keep the rest. With the reverse mortgage, you are going to receive monthly payments over an extended period of time.

Making Payments

Another key difference between these two types of mortgages is how you repay them. With a cash out refinance, you will be required to make a monthly payment to the lender. With the reverse mortgage, you will not be required to make any payments. The mortgage will finally be paid off once you sell the property or when the owners of the home pass away. This means that if you do not want to have to make monthly payments, the reverse mortgage would be a better proposition for you.

 

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