I'm sure there are some drawbacks, so no general "don't do it" advice unless you want to specify the whys.

But can some weigh in here on the different kind of programs and what you might expect from your equity?

Like what % of that equity will they lend on; how much up front can you get vs. monthly stream; and whether/how they insure the payment of taxes..

just looking for some basic outline of "here's how it works typically:"

thanks

Diggity said:

---

in a nutshell, you are taking out a specific amount of money from the house and in exchange for that, you typically pay variable interest rates, large closing costs and a ton of hidden fees.

In the worst cases, these fees quickly eclipse the actual equity in the home and leave your spouse or children with nothing.

There's a host of complications that can arise if the person who took out the mortgage passes away as well. They can be solved for but oftentimes there people taking out these loans aren't at the height of their cognitive ability so lots of chances for the salespeople to abuse that situation.

In my mind, they are a last resort only.

---

This is a totally unfair picture of reverse mortgages.

Not an expert but I think the borrower dying is one of the expected outcomes.

Please enlighten us.

I have a family member that could use the income. Heirs really dont need the equity from the home at their death. There's several ways we could get them cash but that wouldn't be wise. They need monthly income.

Can it be done if the home has good equity but still has a mortgage?

Agreed. It's just about not getting the spouse/dependant booted from the home if the person who took out the mortgage passes away. Seems basic enough but there's lots of horror stories about complications like that.

CS78 said:

---

Please enlighten us.

I have a family member that could use the income. Heirs really dont need the equity from the home at their death. There's several ways we could get them cash but that wouldn't be wise. They need monthly income.

Can it be done if the home has good equity but still has a mortgage?

---

Yes, it can be done with an existing mortgage, but that will reduce the amount you can borrow. The fees charged in connection with a reverse mortgage are highly regulated in Texas and it is incorrect to say that the fees are exorbitant and will eat up the loan.

The only complaints I ever saw about reverse mortgages fell into two categories. One, the borrower didn't understand that if they move out of the house (i.e. to a retirement center) the loan becomes due. Second, if you have a child who is counting on inheriting the house to live in and you don't tell them, they are in for a shock when you die. There are literally people who look at these as a gift that they shouldn't have to repay. It's a loan. It accrues interest. It has to be repaid.