Reverse Mortgages

Parent Q&A

Parent wants to do Reverse Mortgage but doesn't seem a good idea Jul 25, 2018 (6 responses below)
Reverse mortgage? Jun 6, 2018 (6 responses below)
  • My dad owns a home with very small mortgage in Lafayette that is now worth a good deal.  He's in great health, super active and is 81.  He has a good income that should cover all expenses plus could save - but my sibling milks him for money and has for decades so dad struggles to have enough every month and has gone through all his savings.

    I am very concerned about this reverse mortgage and he is defensive as to why he wants it. The only explanation was that he is worried that at his age things could change quickly so he wants to have the cash for us to be able to afford to pay for in-home care if he needs it.  He's very independent and definitely wants to stay in his home no matter what but he still has a lot in his 401k and IRA (takes mandatory distributions) so I would think it would be better to access those instead. He won't talk to me about this decision which is usually the case when he plans to give more money to the sibling but I don't know for sure.

    From what I see, reverse mortgages are normally for people who can't meet monthly expenses or who have no other assets to access so need to tap into their home but in his case, since he doesn't have difficulty meeting monthly expenses (or shouldn't if not giving all his money away) it wouldn't make sense - and if he wanted to tap into a source to give more money away, won't it be better to close the IRA or 401k and use those funds?  I just can't figure out why a reverse mortgage would be good when he could easily live another 15 years like his father and brother both of whom lived to be almost 100.  I told him think if you had done a reverse mortgage 15 years ago you would have been locked into a value half what it is now. It always feels like the top of the market and I am sure we'll go through another slump in the next few years but I still don't think it makes sense for him.

    Dad is naturally sensitive to making his own decisions so I want to be respectful of that but on the other hand I just can't stand back and not intervene if the decision is financially bad considering it's his one big asset.  (For background, a similar thing happened to my divorced mother, in her case all her savings were gone through until all she had left was her house so she sold it suddenly and I just stood back afraid to step in knowing how unstable my sibling is but I regret that so much).

    I want to approach this logically but who do I turn to?  What sources tell me if it is the best decision for him or not?  He went to his "retirement guys" and they told him it was a good decision and that reverse mortgages are now good, that they have fixed the problems they had before. I tried to tell him of course they would say that but he just won't listen.  I think he feels overwhelmed and doesn't know what to do and I am just worried sick after seeing what happened to mom.  If it is better for dad to tap into his 401k & IRA instead of a reverse mortgage and something were to happen to him, would I as his POA be able to take a home equity loan or come up with more money easily?

    Any advice, contacts, webpages or experiences would be so welcome!

    If the plan is to keep the home after your parent passes, make sure he puts it in a trust before getting the reverse mortgage. Probates take so long that the reverse mortgage company is likely to foreclose before probate is completed. 

    It's obvious that you are really emotionally wrapped up in this situation, but I guess reading your post made me wonder if what you were really upset about is the fact that your sibling has drained a lot of money from your dad and that this is his last big asset to take. I'm not judging, I was disinherited by my own dad, and a lot of money was left to one sibling (out of several) and some but not all grandkids, I get it, it sucks. But ultimately, it's his money and assets to do what he wants with, and if he won't listen then there's not much you can or should do. In the meantime, I'd advise that it's better to focus this energy on your own life and family, and try to be a loving support to your dad, who you obviously care about and are lucky to have around, and enjoy the time you have with him. Good luck!

    I think you have a people problem, not a financial problem. You and your father have different opinions. You don't want him to spend money on your sibling, and he does want to spend that money. You really have no control over this. The only thing you have control over is yourself and your own money. You can tell you dad: I am worried about the reverse mortgage and feel it is a bad idea. But it is your house and you can do with it what you want. But if you end up needing more money, I am not bailing you out. 

    I would resent it if my sibling got most or all of the inheritance because of bad money management. And I suppose you resent what is going on. But there is really nothing you can do about it. 

  • Reverse mortgage?

    (6 replies)

    Hi

    my husband and I are considering getting a reverse mortgage and wondering what others think about them. We are 55 and 65 and would want to rent out a studio in back. Hoping to have money for our daughters too rather than giving House to the bank. Our cash flow is low currently butwe have good equity in the house  

    -need advice ASAP about others experiences with reverse mortgage  

    do we pay a lot of interest? 

    Thx!!!

    RE: Reverse mortgage? ()

    Reverse mortgages are not as simple as those selling them would have you believe.  Here’s a good resource for evaluating the suitability for you:

    http://canhr.org/factsheets/abuse_fs/PDFs/FS_RevMortSuitability.pdf

    http://canhr.org/factsheets/abuse_fs/PDFs/fs_RevMortSuitabilityWorksheet.pdf

    RE: Reverse mortgage? ()

    Please do research the product known as Reverse Mortgages very carefully before you sign up. There are likely other forums with more experience in this area, since BPN members are often younger families. As an estate planning attorney I have observed clients with these products, and sometimes had to probate estates burdened by them. The upfront fees are high. Sites such as Kiplinger, the Motley Fool, and others may be able to give you the pros and cons of this "last resort" option.

    RE: Reverse mortgage? ()

    Hopefully someone who knows details can reply, but I’ve always heard “stay far, far away” from reverse mortgages. From your post it sounds like you’ll be renting your studio?  That can bring in pretty good money these days, and since your cash flow is good, it doesn’t seem like you’d have to go the route of a reverse mortgage. If you did, the house wouldn’t be yours to leave to your kids, I don’t think...

Archived Q&A and Reviews


Aug 2009

Can anyone please recommend a reverse mortgage broker or consultant in the Berkeley area (or nearby) who is experienced and reliable/trustworthy? If there is someone you have had a bad experience with, we would also appreciate the warning. Trying to help my aging parents Does anyone know of a credit union in the Bay Area that is offering reverse mortgages? We're trying to keep the start-up costs down. Seeking reasonable rate on reverse mortgage


Laura Levy of Holmgren Assoc. 510-521-6265 is both knowledgable and very caring. I wholeheartedly recommend her. Isadora


I have done a couple of reverse mortgages for clients with similar situations as yours and used conventional lenders with some success. There is also a company by the name of Nestworth that offers only reverse mortgages. The advantage is they are a private company so do not have to follow the government guidlines that conventional lenders are required to. That being said, I am slightly skeptical about the program and would suggest you do your due diligence before hand. ie how long is their capital going to last? mathew


I recommend you talk with Laura Levy about reverse mortgages -- she specializes in them. She's very knowledgeable, experienced, and kind. Her office is (510)521-6465 and cell (510) 219-4997. E-mail is laura [at] mortgageholmgren.com I arranged a reverse mortgage for my elderly mother (not through Laura -- my mom is in the Southeast), and it was the only possible way for her to remain in her home. We are realistic though, and don't expect to have any equity left by the time she is no longer able to live there and the loan is due. It's an expensive loan, but you can amortize the costs over time and minimize your risk with mortgage insurance (I believe it's required). Good luck. Anon


Marge Bottari from All California Mortgage has helped a lot of my friends parents. She is fabulous and knows her stuff. 415 464 8209 415 305 3425 mbottari [at] allcalifornia.com rachel


March 2009

Can anyone recommend an experienced, honest, reliable reverse mortgage broker? I am looking to get a mortgage on my parents' house in LA, but I'm having a hard time finding recommendations/reviews/testimonials of reverse mortgage professionals. I want to work with someone with knows exactly what he/she is doing, who can educate me as to the process and outcomes, and who can make it all happen FAST. Please, if you know of anyone, reply with their contact info and let me know WHY you love them! Thanks BPNers - sara


Marge Bottari from All California Mortgage is fabulous- really listens, and will do everything in her power to help. 415 464 8209 (direct) 415 305 3425 (cell) mbottari [at] allcalifornia.com rachel