Anyone ever look into a reverse mortgage?

[Volzfan]

My parents are in failing health and will soon need to be in Assisted Living at the least. We were hoping when the time came to be able to sell their home and use it to pay what Long Term Healthcare didn't cover. We knew that we were in a bad real estate market.

Well now that they were flooded that is going to make selling their home almost impossible at least for a few years. They didn't get water in the living area but it flooded the crawl space and the garage. They are in a flood plain and had insurance. They have a "Structural" policy only and a $2k deductible and it runs them about $925 a year. I don't know what it would be if it covered the contents too. If I were looking for a home like this one I wouldn't waste my time even looking at it. I wouldn't buy a house that required an extra thousand a year or more when there are plenty of homes available that are on high ground.

I just saw a commercial about the reverse mortgages but I know if I call them they will make it sound like the greatest thing going. I was hoping that someone on here would have already researched this product and could fill me in without getting a sales pitch.

Have anyone here checked into these and able to shed some light on them? I'm not really expecting this to be a good option but I need to at least know all of the options.

Thanks!

[Smith]

I think you have the right idea that it is not a good option given most circumstances. It will basically use up any inheritance they would have left before they go. However if they don't have much time and you and the family will be stuck trying to dissolve their assets to pay bills it may be a decent option in this particular circumstance. I would talk to a lawyer who deals with wills etc or a good accountant and let them do the right math.

Edited May 17, 2010 by Smith

[greenego]

I have not heard very many good things about these mortgagees. I think you can only get about 60% of the home FMV. I also read about an interest charge that the leader adds on. This is not tax deductible to the borrower, your parents.

Edited May 17, 2010 by greenego

[Guest Bronker]

Do you have a CPA or a financial planner?

I know you are a Dave Ramsey guy, and I use his ELP for this area. I have been with him for about 8 years now and love him. He has never once tried to 'sell me something.' He educates me, and steps back. He waits for me to call him back.

I'm sure he could give you some guidance if you'd like his contact info.

Just a thought, and only one of the options you have. I get the sense (from our conversations in the recent past) that you are feeling uneasy about any financial product that leverages one's largest investment that currently has zero liability.

You should still have my number. Feel free to call me.

[Farman]

how the damage to your parents home would effect a reverse mortage. When my Dad did his, they came out and appraised his home. Before he was allowed to sign anything he had to see a case worker who explained everything to him.

It's worked out well for him. I don't care if he spends everything he has as long as he is having fun. He turned 90 last Dec. Right now he's in Alberta CAN. with his 70 year old lady friend.

Check into it. It may be well worth it for everyones piece of mind.

[Volzfan]

how the damage to your parents home would effect a reverse mortage. When my Dad did his, they came out and appraised his home. Before he was allowed to sign anything he had to see a case worker who explained everything to him.

It's worked out well for him. I don't care if he spends everything he has as long as he is having fun. He turned 90 last Dec. Right now he's in Alberta CAN. with his 70 year old lady friend.

Check into it. It may be well worth it for everyones piece of mind.

As soon as the new garage door is up there will be no evidence of the flood at their house but I talked with a friend in the real estate business and he thinks that it may be 2 years before we would be able to sell a house in this neighborhood. There were 4 houses already for sale before the flood that were not selling. Renting would only bring about $850 per month and they may need 2k-3k per month to pay for their care.

Thanks Farman!

Bronker, I'll check with my ELP.