Reverse Mortgage your article of May 30 2017
I am in the same position at your father - not quite understanding how the loan, and principal limit ($ available) is building and for how long. I understand I can stay in my house until death or decision to sell. I am 86 years old and in excellent health. My husband (now deceased ) and I took out the RM in 2007 - appraised value $585,000 - orig. principal limit was $280,800. - The best thing we could have done. But because of many unforeseen expenses I have had to withdraw, and the closing loan balance as of 6/30/17 is $514,940. The Net principal limit ($ available to me) increases every month and is now $119,532. My questions: What happens when the loan balance exceeds the orig. appraisal - does it just keep building up until my demise? My property has gone up in value, because of new development in the town, and also the location (1 block from ocean) - maybe to $700,000. And can I continue to withdraw from the net principal limit of $119,532 which increases every month. I will no doubt need to withdraw betw. $6,000 and 8,000 every year to meet my expenses - I live on soc sec. of $1,600 plus apprx. $500 from a part time job. It seems a shame to have all that money being available but being afraid of touching it in case of possible consequenses? I have not been able to get a response I could understand from the company who holds the RM. The interest they charge is 4.922% . I always enjoy your column when it appears in the Union Tribune , and will enjoy receiving the subscription
Terry Says
Ok, first, I wish you a long and healthy life -- in your home. The RM you took was obviously a line of credit, not a fixed monthly payment. So the very first thing you want to do is to GET IN WRITING the current amount you have available to withdraw. It's nice that the amount increases. But is that guaranteed? Get those answers in writing. Then you have some planning to do. You can certainly withdraw $8,000 every year for the rest of your life expectancy, based on the amount you quoted. But have you made plans for when you can no longer stay in your home alone? Do you have a healthcare power of attorney? Do you have a trusted adult child or other person to handle your financial affairs? These are all thing you should consider now, while you are in good health and capable of making plans.
