I received some feedback from mortgage specialists on my opinions about reverse mortgages. I will clarify my position and stick to my guns.
When you have signed for a reverse mortgage, can you sell your home? Can you will it to an heir?
I said you cannot, but technically, the answer is “yes.” Your name is still on the title.
- You can sell and you can collect all of the profits, but only if there is any money left after you pay back all funds that you received, plus interest and fees.
- Your heirs can inherit if they are able to repay all of the money the senior received plus interest and fees.
Reverse mortgage professionals said that people can use these funds to avoid cashing in other assets that might still increase in value, or they can pay cash for a smaller residence.
The upper limit of funds available from reverse mortgages applies to homes with values no more than about $600K. In my experience people who choose reverse mortgages do NOT have homes in that range of value. They don’t have other appreciating assets. If they buy another property, there’s no remaining value to pay off the money they took out of the first home. They look to reverse mortgages to stabilize their incomes, meet financial obligations, or retire debt, as a last resort.
The people in my practice and in my family who chose reverse mortgages did so because they thought they had no other options. For most people, this is a strategy of last resort.
SO, I repea and fully believe that, you cannot sell or will your home unless you and your family are otherwise wealthy. Most of you would not have taken a reverse mortgage if you were wealthy.
Again, don’t make eighty year-old moves in your sixties, when you are likely to outlive the value of your home. Yes, you will be able to stay in the home after the equity is gone, but you will still be responsible for taxes and repairs. If you could have afforded that, you probably wouldn’t have chosen a reverse mortgage. Most people who outlive the equity find themselves in homes that fall down around them.
The program does mandate that you have a counselor, but most of these professionals are totally unfamiliar with eldercare resources; they can’t discuss all of your options. At any age make sure a professional geriatric care manager is part of your reverse mortgage counselling team. Before you sign, have the GCM help you investigate other potential benefits through the VA, Departments on Aging and other resources found in the www.EconomicCheckup.org.
Sorry Fonzie and Congressman District Attorney. I still believe that for most seniors, this is not a slam-dunk decision. Be Ware.