Free: Contests & Raffles.
If your kids are well off and don’t need an inheritance at a certain age it seems like a no-brainer? Basically a home-equity loan with no payments. My Mother-in-law took a couple hundred thou out for bills and medical and then when she sold the home that got deducted from proceeds. Was a real help.
Dave has an opinion, and he’s not shy about sharing it. He may use a bit of hyperbole, but he brings up some good points to consider.
My mom took out a reverse mortgage. 20 years later when she had to leave the house to live in assisted care I had to sell the house. It sold for 1.5 million….. I then paid off the 1 million owed to the reverse mortgage company, 200,000 in capital gains taxes, 150,000 in realtors fees then more to escrow etc. By the time I finished paying everything there was just over $150,000 left, most of which which went for high quality assisted care at $6,000 / month. So it worked ok for her but not much left for heirs. Your mileage may vary.
As a requirement, I would like to see a consumer advocate assigned to represent anyone contemplating a reverse mortgage. People that find themselves in this situation are often the very definition of a population vulnerable to predatory lenders and may not fully comprehend the details of the process. A good rule of thumb is to never trust anyone who takes a commission based on the amount of the transaction to be acting in your best interest.
I deal with a fair amount of reverse mortgages at the point of foreclosure. That means the maturity event has happened: typically, the owner has died or moved to a care facility. Those foreclosures would likely have happened while the borrower still wanted to live in the house, but for the benefits and restrictions of the reverse mortgage. IME, reverse mortgages keep people living in their homes longer than they could without the reverse mortgage.