What are the pros and cons of taking a reverse loan mortgage?
Terry Says: Here is a link to my most recent article about Reverse Mortgages. My personal opinion is that used in the right circumstances they can be a real blessing to seniors who feel they are able to live in their homes for at least five more years, but need the cash to do so. The reason for saying that, is that there are fees and expenses that go along with reverse mortgages. You don’t pay them upfront, but they are taken out of the equity in your home. That won’t matter much if you live in the home for a number of years, preferably until you die! Once you move out, however, the reverse mortgage must be repaid within 6 months, or the home will be sold. You (or your heirs) can never owe more than the home is worth. If the house is sold and there is excess money after repaying the RM, then you (or your heirs) get the cash.
You know I always put my money where my mouth is — so listen to this: I helped m y father take out a reverse mortgage 15 years ago. He will celebrate his 95th birthday next month (God willing), and the RM lenders never dreamed he would live that long! He now owes far more on his RM than his condo is worth — and I tell him to keep living a good long life and “beating” the RM lenders out of their money!