Reverse Mortgage Planning

Found this interesting reverse mortgage situation in The Sacramento Bee. Just shows that exploring the reverse mortgage option could be a helpful choice for your financial planning needs.

Q: My husband and I are in our late 70s and need some advice. Our children were in dire need of financial assistance and unable to find employment. We borrowed $308,000 on an interest-only mortgage to help our kids. The payment was just $1,300 per month, but soon it will increase to about $2,000 per month.

Would it be possible to refinance the house again or should we just sell it? Our income is around $3,700 per month, and we are raising a granddaughter. However unwise it was to take the money out of our house and give it to our kids, we would do it again.

- Marjorie, Fair Oaks

A: You've put yourself in a real burden trying to help your adult children. While they might have had a hard time finding desirable employment, you may be at a stage of life where any employment is virtually impossible.

You should have looked into a reverse mortgage before you took out the interest-only loan. With a reverse mortgage, no payments would be due, and you would be guaranteed to live in your home the rest of your lives.

Unfortunately, you've taken out more money than would qualify under the federally insured reverse mortgage program, so you've eliminated that option (unless your children can now pay down some of your mortgage balance).

If you have enough equity in your home, you could sell your house and downsize to a more manageable mortgage program. If you do not have any equity left, I'm afraid you may be forced to sell and rent a much smaller place.

If you have reverse mortgage questions, please call 1-888-973-8377.

Till next time, have a blessed day..