I think that they are a bad idea.

I would caution against a reverse mortgage. My grandfather had one and most of what is owed to the mortgage company now that he is deceased is. from fees. It is very disturbing. There was language in the documents stating that he could not show them an estate planner.

This loan was taken out 8 years ago, so maybe things have improved. His children now must sell the house and hope that there is some equity left over.

Fees are higher than they ought to be and most are up-front, so it's a very bad deal if the homeowner dies or wants to sell the home only a few years later. Works out to be a little more reasonable if the homeowner stays in the home for a longer period of time. Also, as others have mentioned, it depletes what is often the only significant asset for an elderly person, and if that person later needs to leave the home and move to a nursing home or assisted living facility, you're basically stuck with whatever Medicare will pay for.

Anonymous wrote:DONT DONT DONT! Wells Fargo stopped issuing them there were so many frauds etc. A great way to go from having assets to being broke at an elderly age.

Totally disagree. It depends on the person and their financial situation but we did one for my grandmother last year and it was the best choice we could have made. In our case, my grandma was living on social security and whatever the family could contribute. It just wasn't enough. She received a lump sum which was equivalent to about 80% of the appraisal. She now has a large sum of cash to live on and the house can not be taken away from her. Her quality of life is so much better now and that is more important to me than inheriting her house when she passes away.

The fees were pretty low. Just make sure to work with someone you trust. I think the loans are more regulated now than they were a few years ago.

Good luck!

DONT DONT DONT! Wells Fargo stopped issuing them there were so many frauds etc. A great way to go from having assets to being broke at an elderly age.

This is why we have mortgages on our homes. My husband doesn't want us to have to resort to this in retirement. Nice to have a nest egg + small, manageable mortgage.

Anonymous wrote:It's a reasonable option for older people on fixed incomes to get additional money each month without having to sell their home. But in general I think more sophisticated investors would have more options.

This is it - it's an OK option (i) for a small set of older people, (ii) as long as everything goes as planned. How often does that happen, though?

Also, it often removes a significant asset (sometimes the only asset) from an estate, so heirs don't like it. That's a separate issue, though, from whether it's a good idea for the owners.

my grandparents did it and it was a terrible idea. my grandmother is now stuck in a house she doesn't want because she can't afford to move. family advised against it at the time, but they went forward. looking at the contracts now, it seems like a scam to us.

19:11 here. Here's some links.

http://www.nytimes.com/2012/10/15/business/reverse-mortgages-costing-some-seniors-their-homes.html?pagewanted=all

http://online.wsj.com/article/SB10001424052702303822204577464522507162522.html

As the executor of an estate where there was areverse mortgage, it was difficult to unravel and did not serve the interest of the individual well.

It's a reasonable option for older people on fixed incomes to get additional money each month without having to sell their home. But in general I think more sophisticated investors would have more options.

there are very high fees so it's a borderline scam

I read somewhere that it is a bad financial decision and scams older folks out of their homes. Will try to find a link to post.

Both spouses must be 64 in order to qualify. It's not a scam, but it does have to be planned out well.

I've seen the television ads about reverse mortgages. If I understand correctly, you receive monies from the equity in your home and when you die, the company takes what is owed to them and the rest to your heirs. Am I understanding this correctly? It sounds like a high-end scam. Any insights?