Ask Phyllis!

Is A Reverse Mortgage A Good Option?

Dear Phyllis,

I look forward to your real estate column but unsure if this is the right topic for you.  I am a widow with two children in Southern California. As I receive my husband’s pension and social security I am financially comfortable.  My health is good and at this point in my life, I want to travel and enjoy myself.  I am thinking of getting a reverse mortgage on my home.  Most of my friends are advising me against this because they think I should leave my home for my children.  Can you provide some insight about my situation? Thanks in advance?  Wanting to do the right thing

Dear Wanting,

A reverse mortgage is a loan option that enables senior homeowners age 62 and older to enjoy a more comfortable retirement. You will continue to live in your home and pay property taxes, maintenance, and insurance. No monthly mortgage payments are required as long as you live in the home.  The amount you borrow will determine how much you receive each month from the lender.

Many of us have different retirement goals. There is no reason you shouldn’t enjoy yourself with your own money (equity).  Depending on the amount of your reverse mortgage and the final selling price, there will likely be ample funds for your children. A reverse mortgage is considered a non-recourse loan. If real estate values decline, neither you nor your heirs are personally liable for any mortgage amount that exceeds the value of the home at the time of sale.

The downside: The loan must be paid off in full when you “permanently” move out of the home. If you have a reverse mortgage and you no longer live in your home for twelve consecutive months, you may need to repay the loan in full. This also applies to medical issues such as moving into assisted living.  The mortgage is payable upon your passing.

Is a reverse mortgage the right option for you?  The first step is to speak with your financial advisor and a trustworthy mortgage lender.  As always feel free to contact me for a recommendation.