This BLOG is about current topics, retirement issues and my adventures. It's my dream to help Boomers create a fun-filled, healthy and rewarding retirement!
Friday, May 10, 2013
Is a Reverse Mortgage for you?
The FONZ -- we all know and love him from Happy Days fame and now he's back on the small screen trying to sell us on Reverse Mortgages.
But before you jump out there and use your home as a "piggy bank", do you really know what you're getting into?
A reverse mortgage is a loan for senior homeowners that uses a portion of the home’s equity as collateral. The loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away.
At that time, the estate has approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage.
However, an extremely critical factor for married couples is to ensure that BOTH spouses are listed on the reverse mortgage -- otherwise, the surviving spouse can be kicked out of their own home.
Image the trauma of losing your spouse, only to find out that now, in your golden retirement years, you don't even have a place to live?
There's an excellent article in the May 2013 issue of the AARP Bulletin on Mr. Robert Bennett who's in danger of losing his home because when his wife applied for the Reverse Mortgage no one informed her that her husband's name had to be on the loan.