Reverse mortgages...any experiences or advice?

[TakeThePoints]

I am thinking a reverse mortgage should be a no brainer in wifey and my case.  Just started looking into it.  A friend took one out and is very happy with it.  As this forum is my go to source for news and information, I thought I would ask.

[cincydawg]

In my opinion, it is a less preferred option but circumstances could be such that it is an OK option for some. It depends on the numbers of course. You also should ensure to the extent possible your "lender" is financially viable long term.

It also depends on whether you want to leave the house in your estate of course, and whether you might at some point need to move into assisted living.

https://www.businessinsider.com/reverse-...dea-2018-4

[P1tchblack]

I am thinking a reverse mortgage should be a no brainer in wifey and my case.  Just started looking into it.  A friend took one out and is very happy with it.  As this forum is my go to source for news and information, I thought I would ask.

We did something similar at one point, when my wife was in school and home values were very high.  When the market changed, the lender stopped payments and demanded we pay back a portion of the money between the value of our home and what was borrowed.

[dunefan]

Hey, this isn't Tom Selleck's first rodeo.  Would he mislead you?  LOL

Seriously, if you need the money it works.  Your children will see less of an inheritance but you have to live.

[cincydawg]

I would use a line of credit on the house personally.

[Hightop77]

I see it as sort of a last resort for the elderly needing money toward the end of their life while still needing a place to live.  What are you using the money for?

[Alabuckeye]

I see it as sort of a last resort for the elderly needing money toward the end of their life while still needing a place to live.  What are you using the money for?

I'd agree with this.

Essentially you are selling off your 'estate' at a rate that is advantageous to a bank.

If you don't have heirs, if you don't care to leave to them, if it's necessary to live......then it's a viable option.

[cincydawg]

Explore the option of taking out a normal mortgage and buying an annuity. The reverse mortgage is in effect an annuity. Unfortunately, nearly all annuities also come with high fees and charges, that is the GOTCHA in all of these.

If the annuity payment is more than the mortgage payment, that could be preferred, as the mortgage interest could be tax deductible.

I would read the fine print very carefully.

[Alabuckeye]

Annuities are another financial vehicle that are largely skewed to benefit the insurance companies that cover them. I did some research last year for my sister who was looking into one and they have a newish feature where they tie the annuity to the market and supposedly give you a floor/ceiling with 'greater returns'.

As with Whole Life Insurance, my motto is, I can't beat the actuaries. So I stay away from them.

[cincydawg]

A reverse mortgage is basically an annuity. Fees on both are high. They make money on'em obviously.

[cincydawg]

According to Barron's 50 Best annuities for 2017, a 70-year old male who puts $200,000 into an immediate annuity that is “life only” may receive an annual income for life that pays out $1,297 to $1,247 a month.

I'm not recommending annuities either, but this is another option for income.

[Hightop77]

https://www.daveramsey.com/blog/how-reve...gages-work


https://www.consumerreports.org/cro/news.../index.htm

You donâ€t receive the full value of loan. The face amount will be slashed by higher-than-average closing costs, origination fees, upfront mortgage insurance, appraisal fees and servicing fees over the life of the mortgage. In addition, the interest rate you pay is generally higher than for a traditional mortgage.

[3rdgensooner]

According to Barron's 50 Best annuities for 2017, a 70-year old male who puts $200,000 into an immediate annuity that is “life only” may receive an annual income for life that pays out $1,297 to $1,247 a month.

I'm not recommending annuities either, but this is another option for income.

Although fees are an issue unless you use 401K or IRA money to buy one most of the annuity payment will be untaxed as most of it is considered return of your principal. That's based on life expectancy. If you exceed that life expectancy though then it will all be subject to income tax. But the tax advantage should be factored in to the decision.

[TakeThePoints]

I see it as sort of a last resort for the elderly needing money toward the end of their life while still needing a place to live.  What are you using the money for?

I don't need the money, I just would prefer not to pay the monthly house payment.  I have several other properties, but do not ever want to leave this home.  I understand that you still retain equity and are paying a certain percentage to the mort. co. which increases their balance over the years.  Could care less about leaving an inheritence.
The way I see it, nothing changes for  me except I get a good amount of cash and don't have to make any more mortgage payments.  What am I  missing?  Sounds too good to be true.

[cincydawg]

There is always a catch. Check the numbers and the fine print, read up on pros and cons on line, it could be a good option for you.

I personally wouldn't do it.