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Reverse Mortgage Thoughts

September 20th, 2014 at 04:25 pm

Lately I have been mulling over the idea of buying my final home with a reverse mortgage. Or, if I buy before age 62, buy it traditionally and plan to owe about half of the value at age 62, and take the RM at that point.

I am thinking this way because I want to retire with no mortgage payments. The best way to accomplish this is to own a home free and clear. At this point, that is looking unlikely, unless I opt for a 1 bedroom apartment style condo. Such a home is not without its benefits, but of course has some drawbacks too. If I opt instead for a small single family home with a garage, it is looking as though I will not be able to own it free and clear by age 62.

So, I am keeping this idea on the back burner.

Posted in Retirement Dreams | 7 Comments »

7 Responses to “Reverse Mortgage Thoughts”

  1. snafu Says:
    September 20th, 2014 at 05:58 pm 1411235891
    1411235891

    I keep seeing articles on the negative aspects of reverse mortgages, the high fees, the low ratio of equity value to sum given, the loss of future value and the tiny details in legalese often a surprise or misunderstood by owners.

    One issue is determining if your house and it's responsibilities will be a good fit for you in your 70's, 80's and forward. What have you mapped going forward? What services are nearby for your use in your later years? How much space is enough? How much day-to-day care is reasonable? Would a condo with external/structural care built into maintenance fee be worth the price? ...nothing but questions that are difficult to answer

  2. Bob B. Says:
    September 20th, 2014 at 07:19 pm 1411240747
    1411240747

    I dunno. I'm sure there are legitimate circumstances, and some legitimate companies, but reverse mortgages just seem fishy to me.

  3. PatientSaver Says:
    September 20th, 2014 at 10:19 pm 1411251563
    1411251563

    You can't buy a house with a reverse mortgage. You can only get a reverse mortgage after you've accumulated some equity in the house; I think most people would get one after they own the property free and clear. It's really not advisable to get one if you're under the age of 70 becus if you're any younger, there's a greater chance of sucking all the money out of the house before you die. In addition, they are not cheap and there are a lot of pitfalls one can get oneself into if you're not careful

    http://money.usnews.com/money/blogs/on-retirement/2012/12/11/5-reasons-to-avoid-a-reverse-mortgage

  4. Petunia 100 Says:
    September 21st, 2014 at 02:12 am 1411265531
    1411265531

    Buying a house with a reverse mortgage has been allowed since 2009. Smile


    Yes, there are a lot of difficult-to-answer questions. I would not be looking for cash out in any form, just less cash in.

    There ARE a lot of fees, which is a definite bummer.

  5. PatientSaver Says:
    September 21st, 2014 at 12:21 pm 1411302099
    1411302099

    Wow, I learned something new today. You're right, Petunia...however, just remember, you have to be 62 or older to do it, and while you don't make payments while you live in the house, the loan and interest come due when you sell, move or die. You also still have to pay for half the house with your own cash

    http://www.kiplinger.com/article/retirement/T037-C000-S004-buy-a-home-with-a-reverse-mortgage.html#XKz7XQqODfxF2Sss.99

    I don't know, I'd much prefer to see you move to a less expensive area in or out of California, and into a smaller, more modest home that you can own free and clear.

  6. scfr Says:
    September 21st, 2014 at 02:41 pm 1411310486
    1411310486

    Patient Saver has already mentioned what I would suggest. Have you thought about moving to a lower cost area in retirement, where you could pay cash for a smaller home using the equity you have built up in your current home? Once your children are grown and you are retired, you will no longer be tied to your current location by work & schools.

  7. Petunia 100 Says:
    September 21st, 2014 at 04:03 pm 1411315425
    1411315425

    I do intend to move to an area which is somewhat less expensive than where I am now. At this point, I have maybe enough equity to sell my house and clear 10k. Hopefully my home value will continue to recover, we will just have to wait and see. It may not happen, which is why I need a Plan B.

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