Will Miracles Never Cease?
I read so many financial planners who badmouth Reverse Mortgages. They cite many reasons, such as excessive cost, less money to leave to heirs, could lose the house if you do not pay taxes and insurance or maintain properly, etc. etc. etc.
Obviously, you will have less money to leave to heirs if you use the money to buy groceries and essentials. You have to pay taxes and insurance on your home in any case or you could lose it. Let your insurance lapse on a home with a loan, and you will hear from the loan servicer for sure. They have very good records on when your insurance is due.
The Cost Is Higher Than A Regular Loan
But most people who need a Reverse Mortgage do not have enough income to qualify for a regular loan or home equity loan. The RM has only an assessment not an approval, and it is non-recourse. If property values disappear, your heirs are not held liable. If the property holds its value, the heirs can sell it and keep the overage. Also, now there are Reverse Mortgage Equity Lines of Credit and Reverse Mortgages for Purchase.
I do not know why residential home agents do not consider the RM for purchase. You can help someone with no income move to a new home either up size or downsize. Not to be mercenary, but that would mean a listing for sale and a purchase transaction for the agent. Not bad and you are sincerely helping someone accomplish a bucket list item.
There Is A Recent Article From Nerd Wallet
Some quotes from the treatise by Liz Weston:
“A RM line of credit can’t be shut down unless you forget to pay taxes, insurance or fail to maintain. There are no payments to make. The amount available for borrowing increases all the time.”
She further states:
“In any case preserving an inheritance probably shouldn’t be your top priority. You should focus instead on preserving your quality of life and your financial flexibility. Reverse mortgages have gotten safer and less expensive in recent years.”
How about that sports fans? The complete article can be read at: