Ask Terry Questions Reverse mortgages

Reverse mortgages

By Terry Savage on December 15, 2017 | Housing / Real Estate

Terry, i’m 77 years old. I have 4 adult children, of which, 2 have their own homes, 1 is buying a home next year and the other is renting to own. I have my own home with a mortgage balance of $113,000, & none of my children want my home upon my death. I would like some information on reverse mortgages; the pros & cons and who I would need to get in contact with if I decide to go thru with the reverse mortgage. I’m afraid to contact any of these people I see in these commercials on television, because i’ve heard such negative comments about them. Any info you can provide will greatly appreciated. Thank you. Mary Adkins

Terry Says

Well, you know I am a believer in reverse mortgages in the situation you describe.  I did one for my Dad.  BUT, these work best when you have a very small remaining balance on your mortgage.  As part of the process, your existing mortgage balance is paid off.  But the RM allows you to access only about 55-70 percent of your home equity, so there is a cushion (for the lender) in case you live longer than expected. On that basis, your home would have to be worth above $250,000 before you could even get a lender to consider  making an RM on your property.  Remember, you'd have to pay off the mortgage first.  If your home is worth more, and you do go through the process, you must get independent counseling before the loan can be closed. Learn more at www.reversemortgage.org, where you can get great consumer guides and search for a reputable lender.

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