# Reverse Mortgage - talk me into or out of getting one, with facts please **URL:** \ **Category:** In My Humble Opinion\ **Created:** [February 2, 2017, 8:15pm UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845 "2017-02-02T20:15:07Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [February 3, 2017, 1:51pm UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/21 "2017-02-03T13:51:58Z")
The one year limit on being away rule is definitely _not_ standard. Some are for as low as 3 months. Get injured, go into a care home for a bit. Foreclosed! Same with widow foreclosures. The time to refi is often far less than a year! Note that the solution to a bad RM problem is a refi. Note. Note. Note. RMs are a crappy, crappy, crappy loan. Fees, terms, etc. are all terrible. A standard 2nd mortgage is better. A refi is even better. Why make the worst possible choice??? ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [February 3, 2017, 4:03pm UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/22 "2017-02-03T16:03:37Z")
OP what interest rate are you paying on your mortgage now? Suppose you now refinance with a new 30 year cash out mortgage: > [@](#): > > The amount of money you can receive on a cash out mortgage refinance depends on three primary factors. First, the difference between your current mortgage balance and your home’s fair market value limits the maximum cash you can get. Second, your income and credit score indicate the maximum mortgage amount for which you qualify. Third, the mortgage loan you select will have limits on the maximum loan-to-value, or the loan amount divided by the home value. This is typically no more than 75 to 90 percent. [http://homeguides.sfgate.com/much-money-can-out-cash-out-mortgage-refinance-41707.html](http://homeguides.sfgate.com/much-money-can-out-cash-out-mortgage-refinance-41707.html) Mortgage rates are very low now. So look up the numbers: > **[Mortgage Rates: Compare Today's Rates | Bankrate](https://www.bankrate.com/mortgages/mortgage-rates/)** > > Compare personalized mortgage and refinance rates today from our national marketplace of lenders to find the best current rate for your financial situation. ---
**Author:** ![Gatopescado](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gatopescado/32/5711_2.png) [@Gatopescado](https://boards.straightdope.com/u/Gatopescado)\ **Post date:** [February 4, 2017, 4:06am UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/23 "2017-02-04T04:06:56Z")
Old lady that lived in the house next to my folks place in Vegas had a reverse mortgage. It reached the end, and she was out on the street, no money, nowhere to go. I’m fairly ignorant about these things, but as I understand them, basically the bank is buying the house from you, an old geezer. Either you die before the end sum has been paid (bank gets house), or you have to GTFO when it does (bank gets house, it just costs them a little more). Seems like a “lose-lose” for the geezer either way. All these commercials always stress, _“And you still own your home!”._ :rolleyes: Sure, right up until you don’t. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [February 4, 2017, 4:55am UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/24 "2017-02-04T04:55:20Z")
> [@Gatopescado](#): > > Old lady that lived in the house next to my folks place in Vegas had a reverse mortgage. It reached the end, and she was out on the street, no money, nowhere to go. That is not how reverse mortgages work. The end is when you die. (Or move out.) ---
**Author:** ![Roderick\_Femm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/roderick_femm/32/14875_2.png) [@Roderick\_Femm](https://boards.straightdope.com/u/Roderick_Femm)\ **Post date:** [February 4, 2017, 5:10am UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/25 "2017-02-04T05:10:16Z")
> [@Athena](#): > > If you’re going into a reverse mortgage because you think it’s a good financial deal, it’s not. It’s not a way to save money or get extra money or anything like that, and from where I sit, a lot of the issues folks have with them is because they’re approaching them as some sort of smart money advice. That’s not what they are. > > What they ARE is a way for older folks to 1) stay in the house they own and presumably have a fair bit of equity in and 2) spend some of that equity. They are GREAT at that. Not sure what you think the difference is between “get extra money” and “spend some of that equity.” Spending the equity as extra money is exactly what I have in mind. As for a re-fi, that is also an option. Our current interest rate is 4.25%. The rates that come up in **PastTense** ’s link are in that ballpark. So we could re-set the 30 year clock and either take cash out or have a smaller mortgage payment (or a little of both). Sounds like it would pay me to compare the numbers, because with our credit rating we should be able to re-fi with no points. ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [February 4, 2017, 8:34am UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/26 "2017-02-04T08:34:22Z")
The first thing you might do would be to contact your current mortgage lender and see what they can do–how much cash you could get out at various repayment levels or get a lower mortgage payment. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [February 4, 2017, 2:02pm UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/27 "2017-02-04T14:02:20Z")
> [@friedo](#): > > That is not how reverse mortgages work. The end is when you die. (Or move out.) Or fail to uphold a large number of other conditions buried in the fine print. Remember, the goal of RM companies is to foreclose as soon as they can. They make the contract as favorable for this goal as possible. Giving someone money and waiting years to get it back is not their business model. These people are not dumb nor ethical. They know how to take advantage of the elderly. ---
**Author:** ![Roderick\_Femm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/roderick_femm/32/14875_2.png) [@Roderick\_Femm](https://boards.straightdope.com/u/Roderick_Femm)\ **Post date:** [February 4, 2017, 6:29pm UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/28 "2017-02-04T18:29:03Z")
> [@ftg](#): > > Or fail to uphold a large number of other conditions buried in the fine print. > > Remember, the goal of RM companies is to foreclose as soon as they can. They make the contract as favorable for this goal as possible. Giving someone money and waiting years to get it back is not their business model. > > These people are not dumb nor ethical. They know how to take advantage of the elderly. Some of them may be as you describe, but your assumption that all elderly are so gullible and suggestible as to fall for the worst possible deal is a trifle condescending. Or are you assuming that we should all be able to blithely sign large financial agreements without being concerned about the scruples and ethics of the loan provider? The argument against RMs that there are unscrupulous vendors is no more effective against RMs than it is against regular mortgages. That one has to be careful and read the fine print is a given in any financial transaction. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [February 4, 2017, 7:23pm UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/29 "2017-02-04T19:23:16Z")
> [@ftg](#): > > Or fail to uphold a large number of other conditions buried in the fine print. > > Remember, the goal of RM companies is to foreclose as soon as they can. They make the contract as favorable for this goal as possible. Giving someone money and waiting years to get it back is not their business model. > > These people are not dumb nor ethical. They know how to take advantage of the elderly. Reverse mortgages are highly regulated. There’s a lot of wiggle room with regard to the specific terms, but not much with regard to terminating conditions. The terminating conditions allowed by current legislation are: 1. The homeowner or surviving spouse dies, 2. The homeowner sells the house, 3. The homeowner does not live in the house for 12 months, 4. The homeowner fails to pay property tax or insurance for a certain period (generally one year) 5. The homeowner fails to keep the property in good repair (this last one must be something that causes significant reduction in value to the property; painting the livingroom an ugly color doesn’t count.) Reverse mortgages are essentially a form of insurance contract. They are giving you an amount of money today based on how long you are likely to live (or live independently in your house.) If that amount of money is less than they can sell your house for after you die, they win. Because they do this with a lot of houses and have very smart actuaries working for them, they will win in the majority of cases. Are there scummy RM companies out there? Oh yeah. Just like there are scummy insurance companies or financial advisors or car dealerships anything else. But RMs are a perfectly cromulent tool for some elderly people to use, and there’s nothing inherently wrong with them. They’re certainly not a good idea for everyone, of course, it depends on your situation. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [February 4, 2017, 7:33pm UTC](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845/30 "2017-02-04T19:33:50Z")
It IS worth noting that in the early days of RMs there wasn’t much regulation and lots more scummy operators were out there scammin’ on the old folks. The consumer-unfriendly features of some of those old contracts are only now coming home to roost. The point being that a horror story about somebody losing their house today after 15 years of payouts may well be both A) totally true and B) totally irrelevant to a deal signed today under current regs. Subject recently to the risk that regulations can effectively be retroactively rescinded by simply defunding the agency that polices compliance with them. [Previous page](https://boards.straightdope.com/t/reverse-mortgage-talk-me-into-or-out-of-getting-one-with-facts-please/778845.md?page=1)