How Does the Line Of Credit for a Reverse Mortgage Work?

by Wade Pfau, Ph.D., CFA

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Originally published at Forbes

A mortgage’s effective rate is applied not just to the loan balance, but also to the overall principal limit, which grows throughout the duration of the loan. How the effective rate is applied may sound technical, but it is an overwhelmingly important point to understand in order to grasp the value of opening a line of credit as early as possible.

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