Wednesday

Reverse Mortgages Are A Bad Idea

Ok, you work hard your whole life to finally pay off your home, no mortgage, whew and you assuming you paid off a $300,000 home, over the last 20-30 years, you ended up paying approximately $500,000.

Reverse mortgages are basically when you sell your house to someone else and you get to live in it.  Using the $300,000 home example.  At today's rates (using the calculator offered NRMLA), a 70 year old couple would get a monthly payment of $986 for life or a lump sum of just $172,564.

Unless they take the monthly option and one of those 70 year old's lives for another 42 years until the ripe age of 112, then this is a rotten deal.

Think it through.  Getting $172k for something you paid $500 is not a wise move.

The only way the math works out is that interest rates rise significantly and the monthly payments make sense assuming they live 20 more years.

Reverse mortgages are a bad idea!

3 comments:

  1. Retired in FloridaFebruary 21, 2012

    Some of my fellow retirees have fallen into this trap and they cannot get out!

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