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Pro and cons please.

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This is just my opinion... reverse mortgages are only good for those seniors who already are debt free, and want to get some equity out of their house to use in the stock market to get more income, or to go on a major trip, or for remodeling their house to spend another 10-15 years in that same house. Seniors who can easily pay back on the "loan".

Otherwise, to use a reverse mortgage to pay other debts, such as large credit card debts, means the senior is now having yet another huge debt to worry about, as Katiekate had mentioned above, the admin cost, plus the interest added to the debt. It can become very complex.

Pulling equity from the house to pay for around the clock caregivers is just a temporary fix. The amount the bank gives each month won't even get close to what caregivers would charge.

I really believe that some seniors think, in their own mind that if they die, the house goes to the heirs, free and clear, no more debt. Sadly it doesn't work that way if there is still a mortgage or reverse mortgage on the house.

I learned from way back when to never use the equity in my house. If I can no longer afford my house because the house is too much work, then I would sell it, use that equity to pay cash for a much smaller home or for Independent Living/Assisted Living.
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Another cost to RM that's often not realized initially is insurance. Often the elder owns the home free & clear and has for decades. So they have just a old homeowners policy and based on value decades ago. They are underinsured. But when they get the RM, it means all new insurance. If you live in an area where you need homeowners, AND flood, AND windstorm or other speciality peril like earthquake, the price could be staggering.
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I lump reverse mortgages are in the same category as payday loans, if you are that desperate for money it is time to rethink things and make some major life changes.
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In addition to believing that all the above comments are valuable, I'll add that at 86 and widowed, I'm glad I decided never to apply for a reverse mortgage.
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That depends on what the elderly person hopes to get.

They will lose the house. If they wanted that house to remain in the family...reverse mortgage will virtually guarantee it won't. The terms of horrible.

First, the admin cost to write the loan is HUGE. It comes right off the top. Then, the monthly admin costs are deducted next. If a person gets a reverse mortgage on $100,000 home they own free and clear....they end up getting only $65,000. And, the elderly must spend some of that money to keep the house up.....BUT...when they die the family is offered the home on a buy back for $200,000.

It is another example of government allowing corporate America to rip off those most in need.
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Thank You!! freqflyer....My thoughts as well...
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My aunt and uncle made a mistake of getting a reverse mortgage. First the interest rate is so high they could of never paid it off. Secondly after my uncle died, my aunt either had to continue paying which she was not going to be able too. She was later placed in a nursing home. That made the bank foreclose on the house and the 10 ac. they borrowed against. Big mess! If any of the family wanted the house they would of had to take over the payments or get a loan. The house could not be willed to anyone. I say when someone mentions RM RUN!!
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If the person considering the RM really needs the money and its the only way for them to stay in their home it may be a consideration. But it does cost in interest and fees for sure. My parents had owned their home for 40 years when my dad passed away. The home was paid off and after looking at my mom's budget (she was 65 at the time) our family decided she should do the RM as she really wanted to stay in her home and we didn't want her to lose her husband and have to turn around and lose her home too. The pro's, it gave her the money she needed for repairs like a new roof, a new heating system and a new sprinkler system (so she didn't have to manually water a large yard). We also set it up for them to deposit about $800/month for living expenses. It allowed my mom to live in her home an additional 7 years (until we had to move her to another state to be near us). The cons, high interest/fees all the way. The upside for us was that her home was in a very desirable area of Colorado so by the time we had to sell it the value had risen and we got more than the asking price. I would say after the house sale was calculated and we paid off the reverse mortgage it ended up costing her around $36,000 in fee's and interest to be able to stay in her home and live comfortably for nearly 7 years. While I'm not necessarily "promoting" a RM, I guess for us it worked out okay and in my opinion it was worth the cost for her. I figure most people pay interest on a home mortgage anyways, I know I do and I saw this as sort of the same thing. Best of luck to you...
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I remember back when my Boss had a reverse mortgage as he needed the money to pay for his wife's care as she had Alzheimer's. Back then only his wife would be on the loan. She was clear minded to understand what the reverse mortgage was all about and signed.

When she died, my Boss was so heart broken. Less than a month after her passing the bank called him to ask if he going to pay off the loan or sell the house. Say what? He thought he had a year to do that. Nope, pay off or move.

He tried to refinance but couldn't. Thus he needed sell. So he scrambled, trying to get the children to come take what they wanted from the house, plus him finding a new place to live. He had an auction company come in and take out all the furniture and treasures that he and his late wife had acquired. There was no room in the apartment he quickly had to rent.

Every couple of days that bank would be calling him to see if the house sold. My gosh, this man's wife just died. Even after the house sold, went to closing, and paid off the reverse mortgage, for some reason he was still being harassed about paying off the loan, etc.

Thank goodness a couple of years ago the rule about the spouse not being able to stay in the house, if they weren't on the loan, was changed. The spouse can remain in the house until their death or being in a nursing home for a certain amount of time. But that rule only applies to new reverse mortgage loans made on or after that ruling change.
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My sister-in-law had serious physical and neurological problems, and she would have disintegrated totally in a care facility. Her daughter had her for a short while after a surgery, and she kept trying to get out of her house and walk home (about 80 miles). She had some equity in her house, so a RM gave her enough income to have part-time in-home care. She did pass away in her home, and neither of her kids wanted the house, so the lender foreclosed--but it did give her several years of living where and how she really wanted. That was worth a lot to her and the family.
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