Reverse mortgage can be a fine pick
DEAR BRUCE: I am an active realtor at 78. My wife is a part-time secretary at the age of 74. We own our home free-and-clear that has a current market value between $200,000 and $225,000. The local real estate market has been appreciating 5 percent a year for quite a few years. In the past 12 months, the appreciation has been about 15 percent and I would not be surprised if it continued at an annual rate of 10 percent to 15 percent. I have been investigating the idea of obtaining a reverse mortgage, as we would like to be a little more independent since our total income depends completely on our working income and Social Security. We have no retirement or pension plans. Everything I have learned so far about reverse mortgages seems to be positive, but I am certain that there has to be a caveat or two to these programs. Would you elaborate for me? - W.B. Roseburg, Ore.
DEAR W.B.: Reverse mortgages have a place in many people's financial futures. The older one is, the better deal it is and the reason for that is simply, the older you are the shorter your life expectancy. The lender is prepared to advance you more money knowing they will get theirs after your demise. The only advantage of the appreciation will likely come for your heirs, not for you, since you have mortgaged the house and it will not be sold until your death. You should know there is nothing to prevent a reverse mortgage from being paid off simply by selling the house. In other words it's not necessary to continue to draw it down. Even after it's completely drawn down, it isn't necessary to remain in the house forever. It can be sold, the mortgage company will be paid and you will receive the residual. On balance, as long as you understand these details, a reverse mortgage may very well be in your interest. You should understand that as long as you stay in the home and pay the taxes, even though you've exhausted whatever equity could be borrowed against, you cannot be required to leave the house. You are granted life rights.
Call RTG Consultants toll free at 1-888-973-8377 with any questions regarding a reverse mortgage.
Source: The Cinncinnati Post
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