“Any FReepers out there that are savvy about these reverse mortgages? Is this as bad an idea as I think it is?”
People, who will blow away the reverse mortgage payments they receive, are probably the same people who should never have a credit card nor an equity line of credit.
We are looking very hard at the reverse mortgage option at this time.
What happens to people past 65 if their pensions, ss and IRA/401ks fail or become no longer a support if they can’t make a mortgage payment. They will probably lose their home they have lived in for a long time. Who will take care of them if they lose their homes?
The reverse mortgage is a way get the mortgage paid off if you have still have one or to avoid a credit line takeout if the bottom drops out of our country in the next year or so.
The reverse up front closing costs are high and of course there is no free lunch. A reverse mortgage could eat up whatever value you have in your home and leave nothing for your heirs as the interest accrues over the years.
Our particulair downside is that you are required to take the full amount of the loan formula they calculate in a cash payout or partial cash and a credit line or monthly payments.
Homes in our area haven’t really decreased in value yet, and based on county guidelines for reverse mortgages. We could get a sizeable amount of money. More than we would really want at this time. You supposedly can pay back what you don’t need after you cash out to cut down on the interest costs over the years.
You have options to take the full sum, to go on a monthly repayment schedule or take out a certain amount of cash and have like a credit line if and when you need more.
My wife has a problem not leaving anything for our sons, DIL and grandkids, and she is concerned about losing the tax write off for our mortgage interest payments.
Currently the payments from a reverse mortgage are not taxable. Like so many people, most of our money/cash is in our IRA’s. If we want to give say a $1,000 to our sons or grand children. I have to have $1400 deducted from my IRA. Then, I have FIDO send $300 to the IRS for federal taxes and 100 to the Gobernator for Ca taxes. That is not an issue with the money from the reverse mortgage as at this time the money is not taxable.
We have some widow friends, where the reverse mortgage is paid as a monthly check, may be a life saver for them besides allowing them to stay in their homes until they are carried out toes first.
If Obama takes away the deduction for home mortgage interest, I will get more interested in the reverse mortgage.
My wife, who dislikes and distrusts OBoz0 more than I do, has serious doubts that he would allow millions of seniors to live basically rent free for decades thanks to reverse mortgages.
For years my accountants advised us to start 401Ks but we never had enough cash left after paying the mortgages on our rental property...