Is there a reverse mortgage line of credit?

liz_hMarch 14, 2007

At age 50 & 60, DH & I are re-examining our retirement planning ~ aka crystal ball gazing. I'm not a big fan of a reverse mortgage, but would love the opportunity far down the road to occasionally pull some of the equity out of the house - especially if the money would not need to be repaid until we die or sell the house. The total monies drawn would probably be less than a reverse mortgage.

It just feels weird trying to plan for the next 40 years! My guess is that sometime in there we'll see a return of killer inflation, and every type of economic condition imaginable.

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pamghatten

Most reverse mortgages have options that you chose ... one we always recommend borrowers to chose it the line of credit option.

Not sure why you are not a big fan of reverse mortgages .. they are a great product for those that have tons of equity in their property and need some additional financial resources as they get older.

There are new reverse mortgage products coming on the market every week these days. The lenders are all working towards keeping the costs down.

When I am older I plan on getting a reverse mortgage, it's part of my financial planning now.

    Bookmark   March 14, 2007 at 1:15PM
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liz_h

Thanks Pam. It's good to know there is a LOC option.

Actually I think that reverse mortgages can be a very good thing, just see the potential that they could be overused, much like home equity lending can be. My MIL died when she was 89. She had seen a few of her friends "outlive their money". A reverse mortgage with too high a monthly payout, or started too early could easily tap out the home's equity by the time inflation has eaten up a household's other resources. I guess the true picture is that it's a tool, and can be used wisely or carelessly, just like any other.

    Bookmark   March 14, 2007 at 1:27PM
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terriks

My 75 year old mother inherited her mother's house a couple of years ago. Actually she inherited it with her sister, and then bought her sister out. It was a much nicer home than she was living in, plus my grandparents built it in 1945 and it has a lot of sentimental value so my mother wanted to keep it and live in it. With a reverse mortgage she was able to take a lump sum to pay off her sister, plus she has a line of credit she can use to make repairs to the house as needed. She has enough money invested for her normal expenses, but was worried that a house that age would really nickel and dime her. As she puts it the reverse mortgage lets "the house take care of itself." My siblings and I aren't concerned about there being any value left in the house when the time comes for her to live elsewhere, and it's really the best place for her to live right now - walking distance to town and a university with an elder-education program.

    Bookmark   March 14, 2007 at 6:40PM
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liz_h

What a nice situation for your mother. When I started this thread, I was only aware of one type of reverse mortgage - the kind that makes a regular monthly payment to the borrower.

    Bookmark   March 15, 2007 at 1:09AM
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pamghatten

Liz,

Here's the link to the AARP website. They have a lot of really good information on Reverse Mortgages.

Here is a link that might be useful: AARP

    Bookmark   March 15, 2007 at 1:02PM
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terriks

Yes, We are happy that she is able to live in a nice home and neighborhood without worrying about money.

    Bookmark   March 15, 2007 at 7:11PM
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joyfulguy

As far as I know, (a while ago) there were a limited number of lenders offering reverse mortgages in Canada, and they had some restrictions that some didn't like. Plus possibly a bit too high rate of interest.

I think that others have seen it as a good market and are becoming involved, so there may be more flexibility available, now or soon.

It should be possible to increase the amount of the loan in a flexible fashion, according to need.

I think that if one were to shop around, using a regular line of credit, one should be able to find such, without too heavy fee levels, per withdrawal, or whatever.

Good wishes as you make your plans, Liz.

ole joyful

    Bookmark   March 17, 2007 at 12:03AM
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