Is getting a reverse mortgage a good idea?

It seems to be a case-by-case decision. You can stay there until you die but after that it reverts to the bank or lending institution, as I understand it. So it really depends on what you want to do with the house later in life (or death). If you want to leave it for your kids to inherit, then it is probably not a good idea. Not sure about the spouse thing. You’d have to see how they structure the reverse mortgage. They could put it into both your names so it will be there until both of you are dead (or the last one is moved out).

I am not a fan. Yet every financial situation is unique.

I agree with @seawulf575 – it’s dependent on your personal situation, need for $$, retirement age, and so on. I don’t think there’s one simple answer for everyone.

I have never known anyone who had a reverse mortgage, so I have no real-life information.

If your pursue this, get a lawyer to check the fine print. My gut feel is that there’s a catch, or else everyone would do it.

@elbanditoroso I don’t think there’s a catch but you’re putting up your house as the collateral and you lose it when you die. That’s the deal. You have to want to do that. Personally, I would explore other options before doing that even though my kids will probably sell my house.

@elbanditoroso The “catch” is that you don’t own your home at the end of the term of the reverse mortgage, plus their fees and percentages.An alternative would be to take out a mortgage against your equity as a lump sum, invest it and use the payout from the investment to pay the mortgage and keeping the surplus. At the end of it you’d still own your home, but it would require the ability to get a better rate of return on your investments than what the bank charges. if this was 2021, it might make sense, but not at the current rates.

The scary part is if you outlive your reverse mortgage, and by then you will be broke. You can stay in the house but won’t have any money.

I would not do it.

I don’t think it’s a good idea. I can’t exactly say why, but please look into it with a lawyer before you commit.

If you get a reverse mortgage, your wife will get the house when you die.
But she will still have to repay the mortgage or give up the house to the reverse mortgage company when she dies or moves out, say, to a nursing home or assisted living. Your child or whoever can repay the reverse mortgage, like buying their own house.

The reverse mortgage company will want to settle the affair IMMEADIATELY after the wife or you vacates the house.

You can take a lump sum payment or monthly payments. Keep in mind the reverse mortgage company will not give you the entire amount the house is worth.

The house needs to be in sellable condition for you to get the “full” benefit from the mortgage (“Full” being the entire benefit you would receive.).

@zenvelo The person may not have any money to begin with. What’s your point?? Living in a house when no payments are required cannot be a bad thing.

I looked into getting a reverse mortgage when I turned 62 but my house is not in sellable condition, meaning I would have to use the money I got to fix up the house. Not what I wanted the money for, so I gave up the idea.

I’ve worked for 2 financial wizards & they BOTH said to avoid reverse mortgages at all cost. Now, I don’t remember all the reasons they gave, but they were adamant about NOT signing those papers. To answer your Q about the wife, my understanding is that the bank owns the house & they will kick her out unless she can come up with the money you borrowed. She pays off the loan, she gets the house…she can’t pay the loan, she’s evicted. The part that bothers me the most is all the reports I’ve seen where the banks are foreclosing on the elderly knowing they have NO money to fight them with & even the person who took out the loan is evicted. Even if you do fight them, there’s a good chance it will be tied up in the court system until you die & you’re NOT living in your own home at that point. I curse Tom Selleck everytime he looks into my eyes & tells me how safe those mortgages are while he lives in a mansion & doesn’t care where I live. He’s collecting a paycheck on the misery of others!!!

@kritiper No payments may be required, but it still costs money to maintain a house and live in it. And if you outlive the mortgage, by then you are of an advanced age and less likely to be able to pay maintenance costs.

First I am not a financial advisor and have not checked rates. That said,...
You are far better off taking out a home loan or line of credit using your home as collateral. If you must take a lump sum, Invest the funds in a few safe places and only use the loan money to cover any shortfall.
Or if you cannot cover expenses it might be time to downsize and sell.
The only person I know of who actually took out a reverse mortgage.passed on a horror story to her elderly son. She was in her 70s and, got a reverse mortgage because she liked the sound of getting cash. She did not tell anyone. Her adult, disabled son lived with her in the house. After she died, the mortgage holder started writing letters to the address. The son was shocked. While he was still dealing with his mother’s death they wanted him to either move out of the house and leave it in saleable condition or pay back all the money they paid his mother plus accrued interest at a horrible rate. It came to more than the price of the home!
He actually beat them. He stalled for years due to his hospitalizations and let the house run down. He died while waiting for a liver transplant. He left the property a total wreck.
I am not sure but I think one of his sisters was granted ownership for a nominal fee. Now she pays the taxes and has to bring the house up to code.
It is one of those empty run down farm houses with no paint that you pass when you are driving out in a rural area. Sad.

@zenvelo That was a gimme.
All maintenance is the responsibility of the resident/ reverse mortgage occupant.
I may not have mentioned it, but it didn’t mean I implied that any maintenance wouldn’t be required or would be the responsibility of the reverse mortgage company/bank.