Reverse Mortgages:

Cash Solutions for Senior Homeowners

When is a Reverse Mortgage a bad idea?

When the proceeds of your reverse mortgage are going to be “reinvested” by a financial planner – You would need to get a very high return on your investment to make this worthwhile. Putting the equity in your home at risk is never a sound idea particularly since for many seniors, that equity is their only asset.

 When money is being used as a short-term loan – When a senior only needs a small amount of money, a home equity loan is a better way to borrow. Reverse mortgage have higher closing costs than home equity loans, in many cases, do not have closing costs.  

When you get a reverse mortgage to help a relative start a new business – Assuming that your home is your only asset, to risk it after retirement is a bad idea. Ask your relative to take out a loan on his or her own. Even the most loving, honest and hard working relative can fail in business. Young people have years to recover financially.  

When the house is in only one person’s name but there are two people living in the house – Having the house in one person’s name could result in the surviving spouse being forced to sell the home. This is because the reverse mortgage becomes due and payable when the borrower has either died or has moved out of the home for 12 months. To protect a surviving spouse, the property on which the reverse mortgage is based should be in both homeowner’s names.

 When a relative or friend needs money to help them get caught up on delinquent debts – This sounds easy enough: loan money to someone you know well and when they get back on their feet they will pay it back.  However, loaning money casually, especially if it represents a major portion of a senior’s assets, is extremely risky. There is ample evidence that when money is loaned to people in financial trouble, in the majority of instances, it is not repaid.

Reverse Mortgage - Facts

When is a Reverse Mortgage a good idea?

When is a Reverse Mortgage a bad idea?