After many years of arm twisting by my husband and looking into impossibly expensive "over-55 units- Which start at over $400,000 here)" I agreed a few months ago..We signed the papers and we found that in our case we get the benefits. At the beginning of every month we receive a very large sum in our bank account.. We elected to take a lump sum to build my dream four season room. Trust me.. I've been on a spending spree ever since and my husband hasn't complained. Our children are self sufficient..they own homes larger than ours, take more expensive vacations and we rattle around in our home that we bought over years ago worth $$$$ more. What we are doing is using our own money...When the last one of us is out of the house.. the house will of appreciated.. We still pay taxes, still responsible for the upkeep, etc. People say we will run out of $$..there is no way.. first of all before you commit to this by law you must undergo a counseling session as to your alternatives... and second... If one of us lives to be 105...and use up our $$$$ it is insured and backed up by HUD. Yes, there is an upfront fee... If you are interested in information please write..
I believe that most financial planners would recommend using reverse mortgages only as a last resort.
If the goal is simply to pull money out of the walls of a house that's appreciated significantly, a simple refinancing or home equity loan usually does the job nicely.
At the end of the day, with a reverse, you're giving up what for most people is their most valuable asset. If the alternative is foreclosure, it may be a good strategy. If you just want to generate some cash, I think other approaches are usually preferable.
And while I'm certainly no expert, it seems to me that to use the cash generated by a reverse to make major improvements to the house in question is not a particularly good idea. Seems a little like adding a room to a place you're renting.
Well, glad you EXPERTS think it's a bad idea...lol. We researched it or my husband did for several years and I checked out the AARP site also, plus you cannot get Reverse Mortgage UNTIL YOU receive counseling on all your alternatives and that counseling in most places must be done in person with the owners in attendance or both on the telephone.. We do not expect to live another 30 years..but since we still are receiving SSand any annuities this is a plus... it will allow us perhaps four vacations a year instead of two... we are building my dream room...As seniors with the stockmarket the way it has been...this is just a great bonus for us. The only people who seem to be against it are bankers...We don't want to have to repay any loans for repairing or unexpected expense.. We have just discovered our roof needed to be replaced down to some of the plywood....NO PROBLEM!! We can sleep at night without worrying about paying for loans... Oh yes.. we pay and always have paid our credit card bills as they come in and there hasn't been interest paid in more than 20 years... So, we are pretty self sufficient... Meanwhile my husand and I can enjoy our home with our parrots and dog.. the great private back yard and a neighborhood that takes us into the city directly within 30 minutes and to the airport in even less time.. Parrot Pop is 75 and I'm over 70...and we are if I have to admit it are young in heart.. We have alot of living to do, places to go (cruises too) and sights to see... Maybe we are more adventerous than the rest of you..... We are very happy with the Reverse Mortgage company that we have used... a very large name in financial circles which you all have heard of.. We received no "hard sell".. You can always say no...after listening to a representative...it's your $$$$
Bankers know about banking
bankers are discouraging this product (last resort only)
my doctor knows about medicine
my doctor is discouraging me from a certain drug
My mechanic knows about cars
My mechanic advises against a Pinto in a rear end collision
If the issue is trusting a banker, doctor, or mechanic, keep in mind none of the bankers here gain in any way from your deciding for or against this product. If a mechanic posted here not to buy a pinto unless I wanted to visit the international space station, I would take the opinion as honest.
(but what the heck do I know, I'm only a banker)
Agreed. It is a relatively new product. As the population is aging, and in in the case of inadequate savings to maintain a certain lifestyle, the need has arisen for this. It's a different world we live in.
If you don't have adequate medical coverage etc, the added expenses can really diminish your lifestyle anyway, and if you fail to pay taxes or insurance etc, you lose everything anyway.
In the best case scenario, you leave nothing to your children. I for one (just my personal choice) would never do that, in fact do everything in my power for the opposite.
I hope most people do not have to go this route, and eat away at what they have built up in their lifetime. I certainly hope I am blessed with making the right choices in life to not have to resort to this.
Actually Banker we have enough $$$$we travel at least twice a year (we are going on a 15 day trans-Atlantic cruise in just over 60 days and will have planned our winter vacation in the Caribbean), we go to theatre, dine out, and don't pinch pennies. Your making judgements on not knowing us.. I think our philosophy is different when it comes to children...we owe our children nothing more, we have paid for their education, they have homes in the high six figures and want for nothing except the best.. We certainly have adequate medical coverage, coverage for assisted living etc. if need be. Years ago we did much pre-need.. What I've noticed is that parents scrimp and save for their children...then they pass on (I'm of that age)and their kids buy bigger homes, more expensive cars like BMW"s while the mother and father drove a Chevie.. and they take very, very expensive trips..while the parents went to Maine in their RV's. Banker.. this is OUR time to enjoy our retirement..the Reverse Loan is only a bonus for us..trust me there will be lots of. Now, at our age.. we still have places to go, things to see and alot of living...and we want to have this extra $$$ for ourself...don't worry about my children.. When we talked to our family M.D. and he asked questions he was surprised that we had planned so well in advance and we compare travel notes.. This is NOT a last resort for us!!! Hopefully some of the readers of this may see something that hits home...and makes them think about their future life and responsibilities to their children and their spouses..
Well, Parrot Mom, that's all very interesting and I wish the best for you. Seems to me you're trying just a bit too hard to justify what you did to all of us, but hey, that's your business.
But the original post was from Judy, and I would simply point out to her that everyone's situation, lifestyle, values, and finances are different. Which is why, required or not, I would never consider a reverse until I'd talked to a competent financial professional, hired by me, about all the alternatives as they applied to MY situation.
No matter what you decide, it's too big a step to take on your own--or with opinions from a cruise board -
One thing for sure on this thread.. I hope it has given people reading this something to think about whether pro or con... Am I trying to justify...no, I'm just writing how and why it works for us. Did we talk to our banker, yes we did and we also did alot of research.. I would definetely urge ANYBODY thinking of it to do much research...it took much convincing and several years before I agreed. It certainly is not and was not a last resort..
Parrot Mom, Thanks for your insight. Was just wondering how long you've had your RM? We too have been thinking about it. We went to one seminar on it, but still don't have all the answers. We are sitting on close to $400,000 house; our kids are like yours. Two have close to a $1 million house, the other a $2 million one. They won't need our money, but of course they would blow it fast if they got it. By the way, the dining room was packed where we had our seminar (also a free lunch)!!