Author Topic: reverse mortgage  (Read 438 times)

Aigeus

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reverse mortgage
« on: July 23, 2019, 10:52:00 AM »
Alright, I'd like some advice on reverse mortgages, both in general and with respect to a specific situation that my mother-in-law faces.

My mother-in-law is in her mid-sixties, and her husband's health has declined to the point where he needs to live in an assisted living facility, which costs about $3500 per month.  And he will probably need to live there indefinitely; he's not coming home any time soon.  This creates a financial problem:  my mother-in-law needs about $1700 per month, beyond her own income and his social security payments, to cover her bills and his assisted living.

Her original plan was to sell their house, which is worth about $400,000 and which has about $200,000 left on the mortgage (and an extra loan).  But it's not selling. We and her other relatives have been helping her financially for the past year or so, but we can't keep doing this forever.  in addition, when she sells the house, she will get about $200,000 (minus the realtor's fee) but she isn't good with money.  Whatever she gets, she will probably spend.  And then when she retires, she will be in a HUGE whole financially, because she will have little left from the house and will also have to come up with money for her housing payment.

My thinking right now is that it would be better to do the reverse mortgage.  That way, she can stay in her house without the mortgage payment, which means she won't need extra help financially to cover her living expenses and the cost of her husband's assisted living.  In addition, when she retires, she will need less money from us, since she at least will have her housing payment taken care of.

Thoughts?

BlueHouse

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Re: reverse mortgage
« Reply #1 on: July 23, 2019, 11:19:44 AM »
What will happen if she needs to go into assisted living?  Where will the money come from?

six-car-habit

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Re: reverse mortgage
« Reply #2 on: July 23, 2019, 11:20:09 AM »
 My understanding was to apply for a reverse mortgage the home needs to be owned "free and clear" first.

 I can't imagine the reverse loan company will be willing to be listed as the 3rd lienholder on the house . Original mortgager 1st, equity loan 2nd , reverse mortgage 3rd.....

Aigeus

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Re: reverse mortgage
« Reply #3 on: July 23, 2019, 11:47:11 AM »
What will happen if she needs to go into assisted living?  Where will the money come from?

We will buy a long term care policy.  We will need to do that either way.  The money from the house won't be available for that; she either needs to sell it to find her living expenses or do the reverse mortgage.

Aigeus

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Re: reverse mortgage
« Reply #4 on: July 23, 2019, 11:47:51 AM »
My understanding was to apply for a reverse mortgage the home needs to be owned "free and clear" first.

 I can't imagine the reverse loan company will be willing to be listed as the 3rd lienholder on the house . Original mortgager 1st, equity loan 2nd , reverse mortgage 3rd.....

The point of the reverse mortgage is basically to pay off the mortgage.  She will get a lump sum and then pay off the mortgage, and the second loan.

iris lily

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Re: reverse mortgage
« Reply #5 on: July 23, 2019, 11:57:45 AM »
My understanding was to apply for a reverse mortgage the home needs to be owned "free and clear" first.

 I can't imagine the reverse loan company will be willing to be listed as the 3rd lienholder on the house . Original mortgager 1st, equity loan 2nd , reverse mortgage 3rd.....

No, does not need to be owned free and clear. Our friend recently bought a new property and got a reverse mortgage.

six-car-habit

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Re: reverse mortgage
« Reply #6 on: July 23, 2019, 12:47:05 PM »
 Thanks for the clarification, Iris Lily + Aigeus. I looked them up some and the terms are more "open" than i thought.