Reverse Chip Mortgage Questions

Beezer

Beezer

Well-known Member
Can someone tell me the pros and cons of doing this? My wife and I have a condo that is paid off...but have debt. We're looking at this alternative and wondering if we should do it or not.

Any constructive thoughts on this matter would help.
 

You really need to read all the fine print. If both people are out of the home longer than 90 days they can foreclose. This might be a situation where you both are at a rehabilitation facility but expect to get better and return home.

You have to keep up the maintenance to their satisfaction. There’s a case on the east coast that had gentrified a poor black neighborhood where many had reverse mortgages. They used this clause to foreclose on them. The fees are higher and it’s easy to use up your equity quickly.
 
IMO you are too young to use this as a solution unless your condo is in a very EXPENSIVE real estate market or unless you plan on selling it in the near future.

I think it would be better to try and eliminate the source/reason for the debt and then set up an old fashioned plan to repay it.
 

I looked into this option for an elderly aunt. What took years to pay off the home, will be eaten up amazingly fast. And you end up with nothing in a short time. A reverse mortgage seems more beneficial to the bank than to the home owner. But I suppose if your back is against the wall, and you know death is just a couple of years away, you could be forced into it. It seemed like a horrible idea to me. To be left penniless, when your health needs are at their most expensive? I can't wrap my mind around that.
 
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