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Reverse Mortgage for us?

By Terry Savage on August 14, 2018 | Housing / Real Estate

How does reverse mortgage work? My husband turns 64 this month and we have a 30 year fixed. Our balance is around $246,000.00 and our payment is $2217.42. Right now my husband is not employed.

Terry Says

OK, I’ll give you the basics, and explain why you are not a candidate. But first here is a link to my most recent article on Reverse Mortgages, telling the story of how well it worked for my own father.

In your case, it won’t work. That’s because a reverse mortgage is designed for someone who has a fully paid home, or only a small mortgage balance. Then you can withdraw cash on a tax-free basis from your home equity, without ever having to pay it back — until you die, or move out of the home. At that point, even if you have withdrawn more than the market value of the house, you (or your heirs) won’t owe a penny. But while you live in the home you must maintain it, pay property taxes and insurance.

Clearly, you are currently having a problem financing and maintaining your home without your husband’s income. You need to make some adjustments. One of both of you must go back to work. Or you must sell the home, take the equity you have remaining and put it in a bank CD (nothing risky!) and then live more modestly by renting. When you are nearly 67 you can collect full Social Security benefits (try not to take it early as it will cost you dearly).

This is an awful time of life to be unemployed, but at least we are in a good economy where intelligent people are in demand. So make a full effort to see if each of you can find a good job so you can afford to keep your home. Here’s a hug. Terry



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