The older, the better, for a reverse mortgage
DEAR BOB: After reading your reverse mortgage recommendation, I decided to apply for one. I also told my brother. He applied, too. His house was appraised at $140,000. Mine was valued at $350,000. Both of us were approved. His approval was for $90,000. But mine was for only $80,000. When I called the reverse mortgage company, they said the difference was because my brother is 70 and I am 68. Does this make sense?
-- Edwin M.
DEAR EDWIN: Yes and no. For readers not familiar with reverse mortgages, these tax-free, no-payment, lifetime mortgages are available to senior citizen homeowners at least age 62. The older the homeowner, the better, because these mortgages are based on (1) life expectancy and (2) home valuation.
Your brother is a perfect reverse mortgage candidate. With a modest-value $140,000 home, he probably applied for a FHA reverse mortgage. This is the most popular reverse mortgage choice because virtually every senior citizen homeowner is eligible. He can select a lump sum, credit line or lifetime monthly income payments.
But your fancy $350,000 home is different. Although you are only two years younger, because of the relatively low FHA reverse mortgage loan limit, you received a lower maximum reverse mortgage limit.
You should compare the higher-maximum Fannie Mae and Financial Freedom Plan reverse mortgages because of their more generous maximum amounts.
Source: SouthCoastToday.com
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