# Reverse Mortgage?



## needshave (Oct 1, 2020)

What are the pro's and Con's of  reverse mortgage? They advertise the devil out of it, but I don't know anyone that has used it.


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## Kadee (Oct 1, 2020)

That is offered in Australia as well ..personally I would not even consider it, its claimed the bank or other financial business  would not take your home before you pass ..but who knows what they would do they are only interested in making money .


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## New2Old (Oct 1, 2020)

My father did that. He ended up taking less than $40,000.00 from them and then stopped taking any money. 7 or 8 years later he passed away and owed $170,000.00. The interest starts on day 1 and is based not on what you use, but on what your home is worth. Made me sick, needless to say.


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## jerry old (Oct 1, 2020)

It is a racket-and all these celebs making commercials for these thieves are disgusting.

Now-your financial situation  may force you into this trap. there are events wherein your home is your only resource and you
have no alternative.

Read the info, they will provide cash, but the interest clock starts ticking.


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## mathjak107 (Oct 2, 2020)

reverse compounding interest ain't your friend . it can eat up any equity in a heart beat along with the ffes , and insurance costs ...you need to pay for expensive insurance in case the bank can't get enough at sale .

also the bank can inspect the house and demand expensive repairs be done .

you may be ordered to spend a lot of money for a new roof when you are taking the reverse mortgage because you need the cash.

you may find where you live is not good as you age . then you have no equity left to move with


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## Aunt Bea (Oct 2, 2020)

To me, the biggest problem is that it gives you and the people close to you a false sense of security and net worth.

IMO if it's time to change your lifestyle you need to face up to it and make the necessary adjustments.

_“a man can not have his cake and eate his cake.”_ - Thomas, Duke of Norfolk, March 14, 1538


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## mike4lorie (Oct 2, 2020)

My inlaws did it, and they were quite happy when they did it, but after my father in law passed, mother and sister in law went looking at finances... and she took out a line of credit to start paying it back... and what they agreed on, and what she is paying now, I can tell you it was not worth it... Ii think itès only worth it if you have a short time to live (not being rude or insensitive) and want to go out on a bang... then it may be worth it... but otherwise I say stay away from it... Itès not worth it...


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## Butterfly (Oct 2, 2020)

It's not something I would ever do, unless I had absolutely no other choice and had very little time to live.


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## Aunt Marg (Oct 2, 2020)

needshave said:


> What are the pro's and Con's of  reverse mortgage? They advertise the devil out of it, but I don't know anyone that has used it.


Pros... it's a rip-off!

Cons... it's a rip-off!


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## asp3 (Oct 2, 2020)

It worked extremely well for my wife's grandfather.  I forget when he first got the reverse mortgage, but he lived to be 109 and continued to get money for the life of the reverse mortgage.  It didn't make her father happy because he was hoping to get the value of the house after his father passed.


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## jerry old (Oct 2, 2020)

There are cases where it is beneficial as in post 10-depends on your needs-not your heirs.
Then there is post #5                                         
These thieves have such a bad reputation thy we automatically say %#%@&*, but there are cases where it is appropriate.


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## win231 (Oct 2, 2020)

They're willing to pay celebrities a fortune to advertise because they know many people are stupid enough to value their sales pitch.
Tom Selleck & Henry Winkler aren't going to pass up the big money for pitching Reverse Mortgages.....just imagine their monthly bills - for property taxes alone for all those houses.......
And Dr. Oz ain't going to pass up the money for "Green Coffee Extract" for weight loss, even though he knows it's a scam.
In the past, they've paid celebrities to push anti-depressant & hormone replacement drugs.
Recently, Ton Hanks & his wife are pushing flu shots.


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## dobielvr (Oct 2, 2020)

I'm glad to see this thread, as it is something I am considering.  
It's good to read everyone's opinions, cause it is a tough decision for me.

I'm really confused too.  Someone has offered to help me, a relative, like doing our own reverse mortgage.
Not sure what I'm going to do.  I'm having to weigh both sides.....


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## JustBonee (Oct 2, 2020)

win231 said:


> They're willing to pay celebrities a fortune to advertise because they know many people are stupid enough to value their sales pitch.
> Tom Selleck & Henry Winkler aren't going to pass up the big money for pitching Reverse Mortgages.....just imagine their monthly bills - for property taxes alone for all those houses.......
> And Dr. Oz ain't going to pass up the money for "Green Coffee Extract" for weight loss, even though he knows it's a scam.
> In the past, they've paid celebrities to push anti-depressant & hormone replacement drugs.
> Recently, Ton Hanks & his wife are pushing flu shots.



I used to like/respect  Tom Selleck before he became a spokesperson for  AAG.   
My feelings on reverse mortgages are that they can put you in such a hole,  you can never recover.   The interest rates will kill you if illness or old age doesn't.


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## jujube (Oct 2, 2020)

It's like most things that sound too good to be true.  They aren't...……..


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## needshave (Oct 2, 2020)

I'm trying to help a friend here that is interested in the program, she asked for my thoughts on reverse mortgage and I had none, since I had absolutely no information on or history with it.

Her thought was she could take a reverse mortgage against her house, which is paid for, and use that to live on. When she passes the bank would take her home and all was good. She has no one to leave it to. I really did not know how it was intended to or did work.


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## macgeek (Oct 2, 2020)

needshave said:


> What are the pro's and Con's of  reverse mortgage? They advertise the devil out of it, but I don't know anyone that has used it.



don't do it bad idea.  

https://www.daveramsey.com/blog/how-reverse-mortgages-work


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## Nathan (Oct 2, 2020)

win231 said:


> They're willing to pay celebrities a fortune to advertise because they know many people are stupid enough to value their sales pitch.
> Tom Selleck & Henry Winkler aren't going to pass up the big money for pitching Reverse Mortgages.....



When I saw  Fred Thompson's reverse mortgage commercial I knew there would be either blood or money to be had.


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## rgp (Oct 2, 2020)

I used to be sort of a Tom Selleck fan till he started pitching those loans .........I have no use for him now.


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## macgeek (Oct 2, 2020)

they pay rich celebrities big money to push something that is a bad financial idea. pretty pathetic.  that alone should be a red flag that they are a bad idea.


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## win231 (Oct 2, 2020)

Bonnie said:


> I used to like/respect  Tom Selleck before he became a spokesperson for  AAG.
> My feelings on reverse mortgages are that they can put you in such a hole,  you can never recover.   The interest rates will kill you if illness or old age doesn't.


Selleck has a perfect face for such ads.  When he puckers his lips with that friendly smile, it just screams out, "Trust me; I know what I'm talking about."


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## Macfan (Oct 2, 2020)

A Reverse Mortgage (loan) would Never be an option for me. Having said that, I can see where it might be a financial tool given the right circumstances, albeit an expensive one. For those even considering it, I'd advise measuring twice and cutting once. In other words, tread very carefully for the benefits are stacked in favor of the institutions providing the loan, and the pitfalls are plenty. Just be very, very careful. Tom says you can trust them, personally, I don't... Don...


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## Uptosnuff (Oct 3, 2020)

From the consumerfinance.gov site

_"With a reverse mortgage loan, the amount the homeowner owes to the lender goes up–not down–over time. This is because interest and fees are added to the loan balance each month. As your loan balance increases, your home equity decreases. 

A reverse mortgage loan is not free money. It is a loan where borrowed money + interest + fees each month = rising loan balance. The homeowners or their heirs will eventually have to pay back the loan, usually by selling the home."_

The greedy banks/money lenders would not offer this unless they were making BIG bucks off it.  First, they rape you with interest payments on your mortgage(s), then they go back and rape you again with reverse mortgages.

If I had money and no one to leave it to, I would establish some type of college fund or trust before I would give the banks a penny more of my money.


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## Don M. (Oct 3, 2020)

Sometimes, a reverse mortgage can be a good thing.  My old parents both had declining health in their later years(both were in their 90's), and could barely take care of themselves.  My Sister set them up with a reverse mortgage that allowed them to stay in their home and paid for a team of really nice ladies who took excellent care of them 24/7 during the last 2 or 3 years of their lives.  They didn't want to be stuck in some Senior care facility where the prices would have been ridiculous to get the quality of care these ladies gave them.  When they passed, we sold their home, paid the bank about $40,000, and still had enough left over for a nice inheritance.  In their particular case, being able to live out their days at home was much better....and probable cheaper, than a good senior care facility.   One of my old Aunts, in Denver, is at a top tier senior center, and she is paying about $70K/yr. to stay there.


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## Uptosnuff (Oct 3, 2020)

@Don M.   Well, that is interesting.  I'm glad it worked out for them.  I suppose it does depend on your situation.  But I would still research it very carefully before I committed.


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## Don M. (Oct 3, 2020)

Uptosnuff said:


> @Don M.   Well, that is interesting.  I'm glad it worked out for them.  I suppose it does depend on your situation.  But I would still research it very carefully before I committed.



Yes, there are good reverse mortgages out there, but they are Not the one's advertised on TV.  Luckily my Sister worked in the banking business, so she knew the details, and found a plan that worked out good for our parents.


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## Linda (Oct 3, 2020)

My husband and I are no longer Tom Selleck fans after seeing his commercials for the reverse mortgage.


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## Butterfly (Oct 4, 2020)

dobielvr said:


> I'm glad to see this thread, as it is something I am considering.
> It's good to read everyone's opinions, cause it is a tough decision for me.
> 
> I'm really confused too.  Someone has offered to help me, a relative, like doing our own reverse mortgage.
> Not sure what I'm going to do.  I'm having to weigh both sides.....



Just do be very, very careful, and real ALL the fine print and be sure you understand it.  I would strongly advise consulting an attorney about it before taking such a step -- a bit of money spent beforehand can prevent a lot of heartache later.  There is probably a senior citizens' law office near you; they provide advice and counsel for greatly reduced fees or free for many things and they are greatly experienced in things like this.


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## dobielvr (Oct 4, 2020)

Good advice....thank you. ^^^^^


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## Macfan (Oct 4, 2020)

Make no mistake, there ARE cases where a reverse mortgage (loan) will work, as @Don M. indicated, however, in many more cases they provide more grief and heartache than 'better retirement.' So, as @Uptosnuff said, research it very carefully before committing. Don...


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## bowmore (Oct 4, 2020)

A much better deal is a HELOC (home equity line of credit). You borrow what you need and just pay interest on it. I needed the money from my condo to help pay for our new home. When I sold my condo, the loan was payed off from the proceeds.


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## mathjak107 (Oct 5, 2020)

the problem with a heloc is most people who are in need of a reverse mortgage can't afford the payments on a heloc ... they serve a totally different purpose and crowd.

the heloc is for those who can afford to make payments .


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## fmdog44 (Oct 5, 2020)

The word "reverse" is all one needs to hear to know it is trouble. Avoid.


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## chic (Oct 5, 2020)

asp3 said:


> It worked extremely well for my wife's grandfather.  I forget when he first got the reverse mortgage, but he lived to be 109 and continued to get money for the life of the reverse mortgage.  It didn't make her father happy because he was hoping to get the value of the house after his father passed.



It's worked out well for my great aunt who is still alive at 97. She's the only person I know who has one.


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## mathjak107 (Oct 6, 2020)

worked out well ?  that is a very vague  term .

it is like my buddy said his mother tucked away a bunch of stock certificates in a draw and never paid attention and she did well .

so  i told him to bring a list over ...she was doing way way worse then had she just bought an s&p 500 fund .

the term doing well needs to be compared to alternatives ...it rarely is .


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## Butterfly (Oct 6, 2020)

mathjak107 said:


> the problem with a heloc is most people who are in need of a reverse mortgage can't afford the payments on a heloc ... they serve a totally different purpose and crowd.
> 
> the heloc is for those who can afford to make payments .



I have a line of credit against my house which I've used a couple of times.  It didn't have set payments, but I made huge payments and paid it off very quickly.  It had a very low floating rate of interest and was my cheapest alternative at the time and cost me very little to use.  Now it just sits there in case I need it and costs nothing unless I use it.


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## mathjak107 (Oct 6, 2020)

Butterfly said:


> I have a line of credit against my house which I've used a couple of times.  It didn't have set payments, but I made huge payments and paid it off very quickly.  It had a very low floating rate of interest and was my cheapest alternative at the time and cost me very little to use.  Now it just sits there in case I need it and costs nothing unless I use it.


that is very different than someone in need of a reverse mortgage for their income to  eat


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## Butterfly (Oct 6, 2020)

mathjak107 said:


> that is very different than someone in need of a reverse mortgage for their income to  eat



Oh, I know that!  Someone above mentioned a HELOC and I was just throwing in that I had used one to my benefit.

Sorry about wandering off topic.


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## OneEyedDiva (Oct 7, 2020)

Here's some pros and cons from Nerd Wallet:
https://www.nerdwallet.com/article/mortgages/reverse-mortgages-pros-and-cons


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## mathjak107 (Oct 8, 2020)

the big issues come up when one can no longer stay where they are .

you can find you can't drive anymore and need a city with extensive public transportation .

you may want to be closer to family .

the area specialists and  facilities may be lacking  for your conditions .

there are so many reasons those who thought staying where they are would not be an issue .

now when you need to relocate you may have little to no equity left .

reverse compounding plus the fees and insurance you pay for on a reverse mortgage can be devastating to home equity. you have to pay for insurance the bank carrys incase they don't get enough to satisfy what you owe .


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## fmw (Sep 8, 2021)

There is some misinformation in this thread.  As an example, someone wrote above that the interest is applied to the value of the home, not the amount drawn from the reverse mortgage account.  That is incorrect.  The interest is applied to the amount owed on the reverse mortgage.  For some people a reverse mortgage is not a good financial move.  For others it certainly is.  Let me dig into it a little.

People who retire with a pension and people who want to bequeath their real estate to family members can find better approaches than the reverse mortgage.  For other people It probably makes sense for some.  I have a reverse mortgage and the reason it makes sense for me and my wife is pretty simple.  We have no children and, hence, nobody to which to bequeath our property.  We are not retired.  We continue to operate a small business which provides some income that is supplemented by social security.

The reverse mortgage is free money in a sense.  We plan to live in our house until we die.  If that has to change, we can sell the house, payoff the reverse mortgage and move to a more modest place.  Or we can let it go until we are both deceased and leave it to the mortgage company.  At that point it is obvious that we won't care about the house.

We used some of our reverse mortgage to put a new roof on the house and replace all of the exterior doors including the garage doors, pay off credit card and all other debts and buy a new car to replace one that was ailing badly.  It represents about 60% of the available funds from the reverse mortgage so the rest sits in case we need it.  In the meantime, we live in a nice house rent free with no mortgage payments unless we want to make some payments.  Those payments, less interest, would increase the funds in the account by the way and be available to be drawn.

Life goes on here as it did before but without debt other than the reverse mortgage and with the benefit of some home improvements and a new car.  Assuming we both die while living in this house, it would have cost us nothing really since we have no use for the real estate after death and we have nobody to which to give the property.  Given all of that, I would take a reverse mortgage even if I were a millionaire.  Why not make use of the value in the house while we are alive?

So the decision to take out a reverse mortgage is neither right nor wrong.  It is dependent entirely on a person's individual situation.  My one piece of advice is to be sure you shop at least two reverse mortgage companies before committing.  Even though it is a government program with fussy government rules, there is a margin for the reverse mortgage company that can affect the amount available quite substantially.  Do due diligence.  If a reverse mortgage is not for you then ignore the commercials.  I hope this provides some useful information for the OP.


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## fmw (Sep 8, 2021)

mathjak107 said:


> the big issues come up when one can no longer stay where they are .
> 
> you can find you can't drive anymore and need a city with extensive public transportation .
> 
> ...



This is a good point.  Nobody can see the future.  The other point is that the reverse mortgaged house is still owned by the owners and can be sold.  Naturally that would involve paying off the reverse mortgage from the proceeds but, given the numbers, it can still provide for a move to a more modest or more convenient place.  The reverse mortgage certainly isn't for everybody but it can be valuable for some.


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## New2Old (Sep 8, 2021)

fmw said:


> There is some misinformation in this thread.  As an example, someone wrote above that the interest is applied to the value of the home, not the amount drawn from the reverse mortgage account.  That is incorrect.  The interest is applied to the amount owed on the reverse mortgage.


Well, that's the way it was 20 years ago. My father borrowed about $35, 000 and 6-7 years later, when he died, he owed $170,000. Interest WAS based on the value of the house.


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## fmw (Sep 8, 2021)

New2Old said:


> Well, that's the way it was 20 years ago. My father borrowed about $35, 000 and 6-7 years later, when he died, he owed $170,000. Interest WAS based on the value of the house.


It wasn't that way with a government sponsored HUD reverse mortgage.  My interest rate is 1.99% compounded against the amount I have drawn from the account.  Your father's numbers make no sense to me at all.  I'm sorry your father had such a disastrous arrangement.  I wouldn't have recommended that to anyone either.


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## win231 (Sep 8, 2021)

Hey, want an autographed baseball from Steve Garvey?


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## New2Old (Sep 8, 2021)

fmw said:


> I'm sorry your father had such a disastrous arrangement.


At that point, he didn't care. I sure did.


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## win231 (Sep 8, 2021)

Linda said:


> My husband and I are no longer Tom Selleck fans after seeing his commercials for the reverse mortgage.



Even with his confidence-inspiring face?


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## garyt1957 (Sep 12, 2021)

Don M. said:


> Sometimes, a reverse mortgage can be a good thing.  My old parents both had declining health in their later years(both were in their 90's), and could barely take care of themselves.  My Sister set them up with a reverse mortgage that allowed them to stay in their home and paid for a team of really nice ladies who took excellent care of them 24/7 during the last 2 or 3 years of their lives.  They didn't want to be stuck in some Senior care facility where the prices would have been ridiculous to get the quality of care these ladies gave them.  When they passed, we sold their home, paid the bank about $40,000, and still had enough left over for a nice inheritance.  In their particular case, being able to live out their days at home was much better....and probable cheaper, than a good senior care facility.   One of my old Aunts, in Denver, is at a top tier senior center, and she is paying about $70K/yr. to stay there.


How did you get to sell the house when they died? I thought the bank got the house?


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## New2Old (Sep 12, 2021)

garyt1957 said:


> How did you get to sell the house when they died? I thought the bank got the house?


They get the interest that has built up. Assuming it is less than the price of the home, you get the rest.


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