Another way to cash in equity in your house.

Reverse mortgages are becoming more and more popular as seniors move to cash in some of the equity in their houses without moving out. This demand has spurred the financial people to create new and creative ways to cash in on equity. One of them is called a “Rex Agreement” (www.rexagreement.com) created by a real estate investment company, “Rex & Co.”

With a Rex Agreement you sell some part of the future equity growth in your house, which must be a free-standing. single family home in which you live. The ratios are flexible depending partly on the value of your house and the percent of future equity growth you are willing to sell, but a typical figure would be 13% of your current house value in return for 50% of equity growth.

So, if your house is worth, says $300,000, you might get $39,000 in cash, and when you sell your house, Rex would get one half of everything you sell it for above $300,000.

If you use your advance to pay off debt (credit card debt or a mortgage); and reduce your monthly payments, this could be a reasonable good deal (as long as you don’t turn around and get new debt). But if you are just going to use the money for living expenses, you might be setting yourself up for worse problems later when the money runs out. Don’t rush into this without comparing it to alternatives like reverse mortgages.

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