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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76395  
Subject: Re: Reverse Mortgage Advantages to Seniors Date: 2/17/2012 6:03 PM
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I'm kinda thinking that a RM mainly makes sense to people who don't need one.

But perhaps that's colored by the facts of one case I know. By BIL took out a reverse mortgage about 8-10 years ago, and has been tapping it out monthly by writing checks. (I don't know the value of his house nor the amount of the mortgage. Zillow says $120K value.)

Late last year his bank told him to stop writing checks because he was tapped out. Actually, they told him by bouncing the check he wrote for the real-estate taxes. OUCH!! Followed up by a letter.

So now he's 70 years old, has no income other than SS, and has zero equity.
All the factoids about low interest rate, etc. are meaningless when yuo are in that position. He spent all his equity and still has another 10-15 years of life expectancy.

What would be the characteristics of somebody for whom the low effective rate is meaningful and is beneficial? Somebody who has significant assets other than the house they are living in. Somebody who is astute enought to pull the equity from the house and put it in investments. IOW, somebody who doesn't really need a reverse mortgage at all.

Dave, I suspect your clients are the latter category and that you don't have _any_ clients in the position of my BIL.
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