# Reverse mortgage alternatives



## wfalcon49 (Sep 21, 2018)

Hi all, I've been doing some research into reverse mortgages, but aren't sure if they're for me. A friend of mine recommended some services that are promising to be a better alternative. You get paid some money upfront and then monthly, but it seems that there aren't any caps on how much you can get paid.. what do you think? Have you looked at these types of programs?


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## Aunt Bea (Sep 21, 2018)

Hi!, 

Welcome to SF!

I'm opposed to the idea and feel that if you can't afford to maintain your current lifestyle you should downsize to a level that fits your income if that means selling a house and making other living arrangements then so be it.

Good luck!


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## Keesha (Sep 21, 2018)

We plan on putting a reverse mortgage on our house since we have nobody to leave it to BUT I think there’s got to be better options out there ‘cause they take about 50% in equity which is a LOT.


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## mathjak107 (Sep 21, 2018)

Reverse mortgages can end up being terrible . Can you imagine not being able to drive and needing to relocate to somewhere else with public transportation and now you have no equity left and little money ? Or you need to relocate near family and all that equity was eaten up.

plus the bank can do periodic inspections and force you to make major expensive repairs


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## Lethe200 (Sep 23, 2018)

I suggest the OP google "HECM vs HELOC" and spend some time parsing through the info. There are some very comprehensive articles on this issue since HECMs are relatively new to the market.

Each has its advantages/disadvantages. It will depend upon your personal situation both financially, physically, and legally. 

If neither would suit your situation, then downsizing or moving into senior community may work better for you. You need to do your own research because there is no 'one size fits all' in this instance.


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## Butterfly (Sep 24, 2018)

wfalcon49 said:


> Hi all, I've been doing some research into reverse mortgages, but aren't sure if they're for me. A friend of mine recommended some services that are promising to be a better alternative. You get paid some money upfront and then monthly, but it *seems that there aren't any caps on how much you can get paid.*. what do you think? Have you looked at these types of programs?



I am VERY sure there are caps on what you will be paid.  There is no way any lender of whatever is ever going to pay or lend you more than your house is worth, or probably anywhere near it.

I, for one, do not think reverse mortgages are a good idea at all, and have seen people wind up in very sad situations because of them.  I certainly do not think anyone should enter into one without having the whole deal gone over with a fine toothed comb by an attorney or trusted financial planner with expertise in the area who can explain all the pitfalls and drawbacks.  I believe this is an area in which one must be very cautious and be absolutely sure they know and understand precisely all the details of what they are getting into.  This is certainly not an area where one should depend on advice of friends or advertising hype.


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## mathjak107 (Sep 24, 2018)

there are no caps on the  pay outs you can receive , but there are caps on the amount of equity  they will base the pay outs on .


depending on age the caps are about 50% of the value  of the home .reverse compounding interest and all the expenses that go with it ain't your friend and leave you with nothing far to quick .

so  hypothetically if the house is 400k they will take 200k and divide it by a life expectancy formula . that is your yearly amount for a pay out  . like an annuity they will keep paying you as long as you meet the terms. the total amount you get with all the fees can be more than the value of the  entire house if you live longer enough, but that is the risk the lender takes .

just think of an annuity . the amount the insurer pays you is based on what you paid in . but you can collect more  in payments if you live then you paid  .

a reverse mortgage is really a balloon payment loan . you keep racking up more and more  debt with each check they give you and that loan is due when you no longer meet the terms . you or your heirs can satisfy  the loan by letting the lender sell the house or ,  you or your heirs  can pay off the loan .

there never really is a way to get home equity out without taking loans .


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## wfalcon49 (Sep 24, 2018)

mathjak107 said:


> there never really is a way to get home equity out without taking loans .



Thanks, all. I agree a reverse mortgage doesn't seem optimal to us. I guess what interested me was that with this new option someone actually purchases your home, so it's not a loan (and that's also why they said no caps - the longer you live there the more the buyer will end up paying, but it still works out to a good deal for them). plus you can "cash out" if you want to move out early if you need or want to end up moving to a senior community. 

I agree this is something that should be looked at by an attorney before making any jumps into it.


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## mathjak107 (Sep 24, 2018)

those are called reverse mortgages to purchase . i actually thought about doing something with that but in the end the terms are just so unfavorable that any money you put down just gets eaten up so quickly . i just can't get myself to give money away like that .


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## wfalcon49 (Sep 24, 2018)

mathjak107 said:


> those are called reverse mortgages to purchase . i actually thought about doing something with that but in the end the terms are just so unfavorable that any money you put down just gets eaten up so quickly . i just can't get myself to give money away like that .



No, it's still something different.. Is it ok to share links? I don't want to be booted off the forum when I've just joined! but these are the folks that I spoke with: https://getmynestegg.com  Thanks again for your advice.


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## Olivia (Sep 26, 2018)

Banks/Investors never give away anything out of the goodness of their hearts. :chuncky:


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## treeguy64 (Sep 29, 2018)

I have never been able to see how a reverse mortgage can be anything but a financial disaster for anyone who has a reasonable expectation to live for a fairly long time after getting the loan on one's house. It galls me to hear that bushy-lipped huckster, Selleck, on TV, as he cons folks into a very questionable deal: This phony guy has considered reverse mortgages, on a serious basis, the way you've considered how to best decorate your $50M yacht!  I suppose if one is in failing health, has no heirs and simply wants to have a few wild times before the end, with no concerns for his/her estate after death, then the rm might be OK.


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## mathjak107 (Sep 29, 2018)

nothing eats up your equity faster. if it does not matter then great but even if i had no heirs i would rather have planned better ,sold the house and had money left for a charity . it really is a last resort kind of deal .


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## OneEyedDiva (Oct 3, 2018)

I've heard there can be caveats to watch out for with reverse mortgages. And keep in mind regarding other programs...if it sounds too good to be true, it probably is. Tread very carefully if you decide to go this route and do your research thoroughly.


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## mathjak107 (Oct 3, 2018)

many who take them do so because they need money. they don't realize that in their agreement the bank holds the right to inspect the property at any time and order major repairs if warranted at your expense


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## fmw (Sep 8, 2021)

Keesha said:


> We plan on putting a reverse mortgage on our house since we have nobody to leave it to BUT I think there’s got to be better options out there ‘cause they take about 50% in equity which is a LOT.


You need to do more shopping.  The amount of the available funds depends on the value of the property and your age.  My wife and I are in our late 70's and our reverse mortgage is very close to 2/3 of the value of the property.  If the property increases in value it is possible to refinance just as it is with a regular mortgage.   Or it will bring more in a sale, of course.  If you want to bequeath the property to family when you die, then understand that the heirs will have to sell the property to pay off the reverse mortgage and all that interest.  So it may not be what fits your needs.


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## bowmore (Sep 8, 2021)

Run, from a reverse mortgage


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## Kaila (Sep 8, 2021)

bowmore said:


> Run, from a reverse mortgage


And be extremely cautious.


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