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On 9/15/2014 ibb38 said:

On 9/14/2014 wismiss said:

I was listening to Dave Ramsey one evening and a man called in asking about a reverse mortgage.

Dave Ramsey told him that he should not even think about a reverse mortgage. He should either use the equity on his house to get a loan or sell the house and move to a less expensive residence.

The advertisements for a reverse mortgage make me laugh. Do you think Fred Thompson or Henry Winkler will ever need to get a reverse mortgage? We all know the answer to that question.

Check all the guidelines. If for some reason you need to leave your home before having the reverse mortgage for several years, the fees/penalties for selling will be so high you will lose a lot of money.

All of the benefits are in their favor and very, very few in yours.

To me, this seems like a much more viable way to use the equity in your home for living expenses- IF you get to that needed stage in life. Home Equity Loans are commonplace, without controversy- any legitimate bank offers them. The only 'fee' is the interest, and that's even tax deductible! Seems much safer in the long run.

The problem with this is you are getting this loan because you NEED to supplement your income - but a home equity loan is going to require a monthly payment that starts immediately. Most seniors do not pay any income taxes or very small amount because a part of your SS income is tax free and usually your income is not very high beyond that. So the tax deduction aspect is probably not an issue at all.I would think that folks who are needing to supplement their income by using the equity in their home are likely in the group who already don't pay taxes.

[lizzief]

Let me address a couple of issues already mentioned. First, of course people want to stay in their homes with friends and familiar surroundings. We have clients who face this decision frequently. They, with the input of their family, have to decide whether to use their hearts or their heads - and no doubt, it can be difficult.. And some should simply not be living on their own anymore, whether or not they have the financial ability. People in their 90's purchasing a home who are easily confused is a recipe for disaster. So again, do the research, find a place that meets your present and future needs. Second, and I will say again, a house shouldn't be used as a bank, especially for basic living expenses. When that house you are so attached to needs a new roof, heating/ac goes out, appliances are DOA, then what do you do? Finally, yes, rent includes property taxes and insurance, but your rent is usually a fixed amount every month. Assuming you are getting a RM because you need money, how are you supposed to come up with several thousand dollars when the taxes and insurance are due? People buy into the hype of the RM commercials, and make an emotional decision without being fully informed. This is one of those cases where a little amount of knowledge is very dangerous. Nobody, myself included, should be giving anyone advice without a complete knowledge of a person's circumstances, and all of the alternatives. The bottom line is that you may not be able to stay in your home if you are financially strapped, whether or not you are elderly. So get some advice from a true and honest professional on how best to keep what you have and still live reasonably comfortably. But make a fully informed business decision, not an emotional one. An attachment to a home doesn't pay the bills and put food on the table. Be realistic. Funny, isn't this the same advice we give to children when they are first starting out? Live within your means.