Who should get a Reverse Mortgage?

The question comes up about once a week, "who should get a Reverse Mortgage?"

A Reverse Mortgage can give some one either a monthly income or money for major expenses or a combination of both. The two requirements are equity in your home and being over 65.

Since the no payment Reverse Mortgage needs to last a life time, the older the borrower, the greater proportion of equity that can be drawn from their home. The Reverse Mortgage calculates the portion of equity that can be drawn and how much equity needs to be reserved to pay the interest on the loan.

I would advise a borrower that the Reverse Mortgage be the last resource to tap so they will get the greatest benefit.

I am always an advocate of getting what you pay for. Reverse Mortgages are not free. They have upfront fees, while not out of pocket, are drawn from equity upon closing. Interest accumulates on all draws including these closing costs. Will the income provide enough benefit to justify the expense? That is the second question to answer before finalizing the Reverse Mortgage.

MMM