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Up front fees never or if they do, you are getting rooked over 9600.00 . You can get up to 66% of the APRAISED VALUE of your home. Apraised value is the key in these things. A good outside apraisal ran me 200.00 vs free for the mortage company. My outside came up 14,000 more.
Take a close look at the "line of credit" reverse mortage, that allows you to draw what you want when you want it. And you dont pay interest on the part you dont draw.
You will have to have a class and that is done on the phone with a qualifed person arranged by HUD. No big deal, that really are there to help you understand the whole thing. They go over it from page one to page 99.
It doesnt cost a dime to find out and the education is great.
I used to do them for a major national bank. I always told people they make no sense if you plan to sell the house within a few years or leaving an inheritance is really important, or you don't need the money. Conversely, if you really need the money why not? I recall one case where a widow was living on about $400 a month. After we did the reverse mortgage she got about $800 a month. To her, doubling her income was worth it. I used to tell kids if they would just help the parents out financially, perhaps the parents wouldn't have to do this. Didn't make too many friends that way, but sometimes the truth hurts. BTW, I always recommended the line of credit option, but most took the lump sum. By the time they contacted us the bills were usually out of control and immediate cash was the only viable choice.
They make sense in a situation like ours in that we have no kids and when we go, we leave an estate that includes the house (for whatever it may be worth).
It's a way to boost income using an asset you have that will go to someone else when you die. Of course, you pay fees, you aren't going to get anywhere near the value of the house, but you get zero if you don't do this at all. It's appealing because you spent all this money on a house and you actually get an extra return on it by doing a reverse mortgage.
As others stated, if you want to leave it to someone else, of course, you won't do this. If it's not paid for, and you expect to use the house as collateral for remodeling or something, you have issues too. You can definitely get a contract that clearly shows that no one is going to take the house until both of you go, so there is no issue with one spouse remaining in the home.
If you own the house free and clear, you want an extra income to spend at you like, it's something to look at.
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I find it interesting that many of you say a reverse mortgage is good if you have no heirs. It's your money - spend it if you want or need to!! This notion that because you have given birth to someone, you therefore OWE them something when you die, I find to be ridiculous.
My sister and I have told our parents to spend their money as they see fit. They worked for it, not me, we are not entitled to anything.
If I didn't have any heirs, (I do) and didn't need the supplemental income, I would leave my estate to one of my favorite not-for-profits that I already support.
retiredtraveler wrote: We've been looking at them.
They make sense in a situation like ours in that we have no kids and when we go, we leave an estate that includes the house (for whatever it may be worth).
It's a way to boost income using an asset you have that will go to someone else when you die. Of course, you pay fees, you aren't going to get anywhere near the value of the house, but you get zero if you don't do this at all. It's appealing because you spent all this money on a house and you actually get an extra return on it by doing a reverse mortgage.
As others stated, if you want to leave it to someone else, of course, you won't do this. If it's not paid for, and you expect to use the house as collateral for remodeling or something, you have issues too. You can definitely get a contract that clearly shows that no one is going to take the house until both of you go, so there is no issue with one spouse remaining in the home.
If you own the house free and clear, you want an extra income to spend at you like, it's something to look at.
Actually, even if you have a mortgage on the house you can do a reverse mortgage depending on loan to value. Lets say you have a $100k mortgage and the house will appraise at $200k. You can do the reverse for $100k (or more and take cash too) and pay off the current mortgage. So you profit by elminating your house payment. And on the "you pay fees" part, I'm pretty sure all the fees can be built into the loan. So you can do a reverse and not pay a penny. Basically all you are spending is somebody elses inheritance.
Mootpoint wrote: A friend of mine took out a $350,000 line of credit, interest only, at 2.9% and invested it at a 6.5% annuity, pays the interest and damn the kids.
It works for him, not quite my way.
That sounds like something different than a reverse mortgage.
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