Big lenders in the reverse mortgage business have pulled out of the market and won’t issue any new reverse mortgages. Several smaller companies plan to stay in the market.
Palm Coast, FL – August 20, 2011 – Big lenders in the reverse mortgage business – Wells Fargo this month and Bank of America earlier this year – have pulled out of the market and won’t issue any new reverse mortgages. But MetLife and several smaller companies plan to stay in the market, so you won’t have issues finding a reverse mortgage if you want one.
1. Have equity in your home and no way of paying the bills other than selling your home and living on the proceeds (because reverse mortgages have steep upfront fees).
2. Can pay the property taxes and home owners insurance bills from now until you die with or without the money you’re getting from the reverse mortgage. More on that later.
Because you don’t pay back a reverse mortgage, you don’t have to prove you have a future income the way you do with a regular mortgage – the reverse mortgage is your future income.
If you opt for the lump sum and spend it all, the bank can’t force you to move out. You get to stay until you die, or until you’re out of the house for a year, presumably in a rest home.
The catch: If you don’t pay your property taxes, the bank would have to pay them for you or foreclose before the tax man can sell your home to cover the taxes you owe.
If you know how much your home owners insurance and property taxes have risen in your town each year over the past 10 years, you can calculate how much they’ll be in 30 years. If, like me, you just know they always go up, but you’re not sure how much, you can use a general inflation calculator to estimate your costs out to 2070.
A reverse mortgage can be a blessing if your retirement income just isn’t going as far as your retirement costs. Getting to cash out your equity and not having to move truly is having your birthday cake and eating it, too, as long as you have enough cash to make sure you don’t outlive the party.