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Telegraph,

I think you're looking at the reverse mortgage thing wrong:

http://boards.fool.com/Message.asp?mid=14466856

From “The Mortgage Handbook” by William Kent Brunette

pp. 65-66

“Reverse mortgages typically allow owners and their spouses to remain in the home until death until they decide to move from the home. When the home is vacated…the mortgage and accumulated interest must be repaid, usually by the sale of the home or by a relative that inherits the home.”

Heirs inherit your estate. The estate will be responsible for handling any unfinished financial matters. An outstanding reverse mortgage would be one of those financial matters. Most lending institutions that deal in reverse mortgages stipulate the estate [heirs] will be the one responsible for satisfying the outstanding debt. Whether that be through the sale of the home or otherwise.

From “The Wall Street Journal Lifetime Guide to Money” edited by Frederic C. Weigold

p. 327

“The loan [reverse mortgage] usually is repaid by selling the house when you move or die…the payments you receive are based on life expectancy.

Outlive your life expectancy and guess what happens. The debt won't go anywhere but you will, either in the street or to the poor house.

So once again I'll say, you can't spend your house. And as for the contention that you can sell your home and move to a trailer park is simply humorous. The millionaires in Stanley's works are presently living in the homes they will die in.


Telegraph,

I also got something different than you did for Stanley's work

http://boards.fool.com/Message.asp?mid=14467149

From “The Millionaire Mind” by Thomas Stanley

p. 306

“I purchased my home [in 1986], and my family has lived there ever since. The approximate purchase price was just under $560,000. According to conservative estimates, it would sell today for just under $1.4 million.” That represents an appreciation in home value of 7% to 8%.

If you refer to the table 8-5 (p. 310) you'll see that although 39.9% of millionaires carry no mortgage, 60.1% carry some mortgage. In fact, 34% carry a mortgage that is at least $300,000!

So what we see from this information is that the typical multi-millionaire bought his present home for $560,000 and after about 15 years of living there has only paid down his mortgage to $300,000.


What this says to me is that the person who possesses the millionaire mind is less concerned about paying down his mortgage, or even buying a house that is below his/her means. THEY ARE MOST CONCERNED WITH BUYING A HOUSE THAT IS UNDERVALUED. The typical millionaire realizes an appreciation is his/her home's value of 7% to 8% while the average non-millionaire's home appreciates somewhere near the rate of inflation.

Bottom Line:

There are better places to “invest” your money other than your mortgage.
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