Reverse Mortgage?

RedGlitter · Post by **RedGlitter** » Sat Apr 05, 2008 6:48 am

Since losing my mom, a lot of friends have been urging my dad to take out a reverse mortgage. I have heard a lot of bad things about them but we want to keep an open mind. I am concerned that when my dad goes if I'm still living here, that the mortgage company will suck the house right out from under me before I'm ready to move. Is that correct? Does anybody have ANY info or opinions on reverse mortgage? Pro or con? Is it a scam?

Thank you.

mikeinie · Post by **mikeinie** » Sat Apr 05, 2008 7:34 am

My understanding of a reverse mortgage is that it has to be clearly in line with the home ownerâ€™s objective. Basically it is taking out a mortgage against a house that in reality canâ€™t be paid back, the benefit to the owner is they get to cash in on the value of the house and perhaps enjoy a retirement that they otherwise may not be able to afford, while still being able to live in the house risk free. The end result, however is that the house becomes into the ownership of the bank, and it can suck if there is an inheritance involved. Basically you will not be inheriting a mortgage free house, and could end up having to buy the house back from the banks.

It should come down to how your dad wants to spend and enjoy his retirement. If he is considering this, and you are interested in the house, maybe you can keep the banks out of it and come to a financial arrangement with your dad and buy the house from him.

Accountable · Post by **Accountable** » Sat Apr 05, 2008 7:45 am

I think Mike's right. Reverse mortgages are for people who don't plan to leave anything behind.

gmc · Post by **gmc** » Sat Apr 05, 2008 9:35 am

RedGlitter;827486 wrote: Since losing my mom, a lot of friends have been urging my dad to take out a reverse mortgage. I have heard a lot of bad things about them but we want to keep an open mind. I am concerned that when my dad goes if I'm still living here, that the mortgage company will suck the house right out from under me before I'm ready to move. Is that correct? Does anybody have ANY info or opinions on reverse mortgage? Pro or con? Is it a scam?

Thank you.

http://en.wikipedia.org/wiki/Reverse_mortgage

It's not a scam but Read the small print very carefully. In the UK loans of this type are regulated so that a homeowner taking one out doesn't end up losing their house while still alive. Knowing nothing about the american system I can't help except to suggest you're best to talk to a financial adviser or two or three and cross reference the advice. Does he need the money-what happens if he needs medical care etc etc.

cherandbuster · Post by **cherandbuster** » Sat Apr 05, 2008 1:04 pm

Hi Red

Why don't you speak to your accountant about it? You have probably been in touch with him/her already, since it is tax season.

I would think that he/she could give you a most fair and balanced interpretation of the reverse mortgage.

RedGlitter · Post by **RedGlitter** » Sun Apr 06, 2008 10:37 am

Thanks everyone for your advice.

Cher, I hadn't even thought about doing that. I'll run it by him and see what he says.

Thanks!

Lon · Post by **Lon** » Sun Apr 06, 2008 11:39 am

Is your father's house without a mortgage now? Is it paid off? If not, I would not recommend a Reverse Mortgage. If it is paid off and there is no mortgage, then a Reverse Mortgage could free up some equity and give your dad additional monthly income. A properly structured RM could still leave the house to you with whatever remaining equity is left after your dad passes on.

Do a GOOGLE search on Reverse Mortgages and you will find a ton of information that could help you decide. The thing to watch out for are the charges each firm would charge to set up the RM. They vary and are competitive.