Yes, there are good reverse mortgages out there, but they are Not the one's advertised on TV. Luckily my Sister worked in the banking business, so she knew the details, and found a plan that worked out good for our parents.
I'm glad to see this thread, as it is something I am considering.
It's good to read everyone's opinions, cause it is a tough decision for me.
I'm really confused too. Someone has offered to help me, a relative, like doing our own reverse mortgage.
Not sure what I'm going to do. I'm having to weigh both sides.....
It worked extremely well for my wife's grandfather. I forget when he first got the reverse mortgage, but he lived to be 109 and continued to get money for the life of the reverse mortgage. It didn't make her father happy because he was hoping to get the value of the house after his father passed.
the problem with a heloc is most people who are in need of a reverse mortgage can't afford the payments on a heloc ... they serve a totally different purpose and crowd.
the heloc is for those who can afford to make payments .
that is very different than someone in need of a reverse mortgage for their income to eatI have a line of credit against my house which I've used a couple of times. It didn't have set payments, but I made huge payments and paid it off very quickly. It had a very low floating rate of interest and was my cheapest alternative at the time and cost me very little to use. Now it just sits there in case I need it and costs nothing unless I use it.
the big issues come up when one can no longer stay where they are .
you can find you can't drive anymore and need a city with extensive public transportation .
you may want to be closer to family .
the area specialists and facilities may be lacking for your conditions .
there are so many reasons those who thought staying where they are would not be an issue .
now when you need to relocate you may have little to no equity left .
reverse compounding plus the fees and insurance you pay for on a reverse mortgage can be devastating to home equity. you have to pay for insurance the bank carrys incase they don't get enough to satisfy what you owe .
Well, that's the way it was 20 years ago. My father borrowed about $35, 000 and 6-7 years later, when he died, he owed $170,000. Interest WAS based on the value of the house.There is some misinformation in this thread. As an example, someone wrote above that the interest is applied to the value of the home, not the amount drawn from the reverse mortgage account. That is incorrect. The interest is applied to the amount owed on the reverse mortgage.
It wasn't that way with a government sponsored HUD reverse mortgage. My interest rate is 1.99% compounded against the amount I have drawn from the account. Your father's numbers make no sense to me at all. I'm sorry your father had such a disastrous arrangement. I wouldn't have recommended that to anyone either.Well, that's the way it was 20 years ago. My father borrowed about $35, 000 and 6-7 years later, when he died, he owed $170,000. Interest WAS based on the value of the house.
How did you get to sell the house when they died? I thought the bank got the house?Sometimes, a reverse mortgage can be a good thing. My old parents both had declining health in their later years(both were in their 90's), and could barely take care of themselves. My Sister set them up with a reverse mortgage that allowed them to stay in their home and paid for a team of really nice ladies who took excellent care of them 24/7 during the last 2 or 3 years of their lives. They didn't want to be stuck in some Senior care facility where the prices would have been ridiculous to get the quality of care these ladies gave them. When they passed, we sold their home, paid the bank about $40,000, and still had enough left over for a nice inheritance. In their particular case, being able to live out their days at home was much better....and probable cheaper, than a good senior care facility. One of my old Aunts, in Denver, is at a top tier senior center, and she is paying about $70K/yr. to stay there.