Fear of Reverse Mortgages

Most people are afraid of Reverse Mortgages because they don't understand them.  Most think that the government now owns their home. Designed to help those on fixed income, the reverse mortgage makes it like you just got a raise on your social security or pension. Homeowners want to leave their kids a free and clear house.  "It can't be real, it must be a scam!!!"  and the list of objections go on.

My brother in law was 70 years old and had 25 years left on his 30 year mortgage with payments of $1,700/month plus escrows.  Diagnosed with a rare blood cancer, the doctors gave him six months to live.  He had to rob from Peter to pay Paul just to make the payment.  Made Paul happy but he was eroding his savings and social security at a rapid pace.  He wanted to leave his kids a free and clear house.  He would have to live to be 95 to pay off as agreed.  He has 3 children, all are doing well and inheriting a home that would have to be sold to split 3 ways and if no cure for cancer, his wife would have even less money to make the payments for the balance of the term.

They obtained a Reverse Mortgage on the home - $1,700 raise.  He lived to be 76 and passed away this past August.  His wife will be able to live in the home for as long as she wants to.  If the house is not worth the amount of the mortgage balance at that time, HUD will sell and take the loss, if there is remaining equity, she will get what is left.

Happy-Unhappy Ending.