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 Reverse Mortgages 
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Joined: Thu Aug 15, 2013 5:39 pm
Posts: 32
Post Reverse Mortgages
I work in a mortgage dept for a bank and since I've seen several suggestions that we consider reverse mortgages I wanted to point out something that people are not often aware of, that may or may not affect a decision to get a reverse loan.
•Since a reverse mortgage is a rising debt loan, the interest continues to accrue, and this increase compounds over time. As the debt increases, the equity decreases. This will reduce assets for your heirs, as the loan balance must be paid off when you permanently move out or you die. However, you or your estate can never owe more than the home's appraised value when it's sold.
•In some cases, you can lose your house if you vacate it for a prolonged stay in a nursing home, rehabilitation center or hospital. Even though you intend to return home, the lender can require repayment of the full loan balance plus interest.
I had a friend who considered this and she was not informed that her son would have to pay it off when she died. It is always good to be informed before making such an important decision.
Connie


Mon Feb 10, 2014 11:47 am
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Joined: Fri Jan 15, 2010 9:33 pm
Posts: 3395
Location: Vermont
Post Re: Reverse Mortgages
Very good info. Connie, and thanks for posting. I've always heard that you should never get a reverse mortgage, However, there have been people on this forum over the years for whom that was the only thing that was able to help them financially due to high debt and cash flow issues. Since ALFs most times aren't covered by Medicaid, reverse mortgages were the only way they could get their LO the care they needed in an ALF.
Glad you have posted some details about reverse mortgage for everyone to read! Lynn

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Lynn, daughter of 89 year old dad dx with possiblity of LBD, CBD, PSP, FTD, ALS, Vascular Dementia, AD, etc., died Nov. 30, 2010 after living in ALF for 18 months.


Mon Feb 10, 2014 2:05 pm
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Joined: Sat May 25, 2013 3:53 pm
Posts: 273
Post Re: Reverse Mortgages
Yes, thanks for posting that Connie! I think anyone should sit down with a good bank manager and discuss all the options before making any big financial decisions and it's a good idea to have the plan in place before the crisis hits - as it always does...

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Gail, Forum Moderator & daughter of Doris who passed away Dec. 2010 after living with LBD for 7 years.


Tue Feb 11, 2014 2:29 am
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Joined: Sun Sep 22, 2013 9:33 pm
Posts: 3
Post Re: Reverse Mortgages
Thanks for that info Connie,
I have always assumed that the bank gets the home after the owner dies and that the owner can only get what the equity may be as the loan amount when there still exists a mortgage balance.
I've talked in brief with my mortgage lender who stated that they don't recommend reverse mortgages until the owner(s) are at least 70 years old. I'm not sure why.


Wed Mar 12, 2014 9:20 pm
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