The Reverse Report

Can a reverse mortgage help you have a better retirement?

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Can a reverse mortgage help you have a better retirement?

By Kimberly Miller

Palm Beach Post Staff Writer

Updated: 9:17 p.m. Friday, June 18, 2010

Posted: 9:03 p.m. Friday, June 18, 2010

Three years ago, Loxahatchee resident James Gamble was preparing for retirement. His home was paid off, he wasn't married, and he has no children needing an inheritance.

So to finance his retirement - and a summer home in West Virginia - Gamble took out a reverse mortgage, getting about $200,000 out of a house he paid an estimated $85,000 for in 1994.

"I would get Social Security and I had enough to live on and pay my bills, but I couldn't have bought a house in West Virginia for sure," said Gamble, 65. "I didn't want to retire and just do nothing."

Reverse mortgages allow seniors to convert their home equity into cash. Instead of paying the bank each month, the senior gets paid, either in a lump sum, a line of credit or monthly payments. The loan is due, with interest, when the borrower dies, moves or sells the house. Because it is a non-recourse loan, the lender cannot seek repayment from any source other than the property.

via www.palmbeachpost.com

WOW! Finally a very even-handed local article on reverse mortgages. Times certainly are changing.

Reverse Mortgages Now Look Cheaper - WSJ.com

Reverse mortgages have long been considered one of the most expensive ways to extract cash from your house. But that is changing as some of the country's biggest reverse-mortgage lenders are slicing closing costs—helping even some affluent homeowners who want to generate additional income.

Reverse mortgages allow people who are 62 years old and older to convert their home equity into cash. Instead of the homeowner writing a check to the bank each month, the bank pays the homeowner, who can elect to receive a lump sum, a line of credit or monthly payments. The loan is due, with interest, when the borrower dies, moves, sells the house, or fails to pay property taxes or homeowner's insurance. Heirs typically sell the house, pay the balance and keep whatever is left.

via online.wsj.com

Here's another article from the Wall Street Journal that talks about reverse mortgage costs coming down. I think this accurately reflects some of my conversations on the radio program.

Your Money - Reverse Mortgages Still Costly, but Less So - NYTimes.com

Reverse Mortgages Still Costly, but Less So

By TARA SIEGEL BERNARD

The adage that you can’t take out a loan to pay for retirement is not entirely true.

Reverse mortgages, which allow older homeowners to pull cash out of their homes without making payments, have been around for decades. They are often used by people who want to stay in their homes, but need extra money to pay medical bills, for instance, or to retire other debt.

Reverse mortgages also have a reputation for being expensive, and they are. But if you’ve been thinking about one, it’s worth taking a closer look now because several lenders have cut prices in recent weeks. As with most complex financial products, however, you need to know exactly what you’re getting into.

via www.nytimes.com

Here's a great article from the New York Times recently about reverse mortgage pricing coming down. I don't understand why they say both spouses need to be on title. That's just plain an inaccurate statement. I'd always recommend that both owners be on title so that the surviving spouse will alway be an owner. However, its not a requirement to do a reverse mortgage.

Misconceptions of Reverse Mortgage Reality. Getting Passed Preconceived Notions

Let’s look at the facts to ease your fears:

1. A reverse mortgage is a mortgage just like any loan against the home but it has special terms for seniors 62 and older.
2. The lender or bank does NOT own the home – YOU OWN THE HOME, you keep the title!
3. There are no income or credit score requirements to qualify.
4. No monthly payments required.
5. There is no limitation on how the funds can be used.
6. More options – Funds can be received in monthly payments structured as needed, line of credit (with a growth rate), lump sum, or a combination of these.
7. Social Security and Medicare are not affected because it is a loan, not considered income.
8. Medicaid (Medical in Minnesota) can still be received with the reverse mortgage.
9. Borrowers can stay in the home as long as it is their primary residence or in the case of a couple as long as one borrower is still in the home as their primary residence.  The due date on the mortgage is the youngest borrower’s 150th birthday.
10. At the time of sale if the home is sold for more than the loan balance, the borrower(s) or their heirs receive the difference.  The bank does NOT keep the difference!

via www.mortgagenewsdaily.com

Great article about common reverse mortgage misconceptions.

Now is the Time to Finance With a Reverse Mortgage! « Real Estate Blog

A reverse mortgage is a great financial solution for homeowners who are seeking ways to keep their home, pay all their expenses and still maintain their financial independence. Now is the best time for homeowners to take advantage of this type of financing. Soon, certain changes will take place within the reverse mortgage program that will likely affect future applicants.

via www.stockmarketsreview.com

Top Ten Things to Know if You're Interested in a Reverse Mortgage - HUD

HUD's Top Ten Things to Know if You're Interested in a Reverse Mortgage

http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm

Financing your retirement with a reverse mortgage - cape-coral-daily-breeze.com | News, sports, community info. - Cape Coral Daily Breeze

Financing your retirement with a reverse mortgage - cape-coral-daily-breeze.com | News, sports, community info. - Cape Coral Daily Breeze

Great discussion of Reverse Mortgages by a Realtor.