Suppose 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 and you choose an option to receive equal monthly payments over a period of 10 years.
1. Discuss what will these payments be?
2. If you choose to move after 5 years, explain what will you owe the bank?
3. If the home appreciates at 1%, discuss how old will you be before your loan balance exceeds the value of the home?