I know I've posted a lot about how great Reverse Mortgages are, but the truth is that every situation is different. I have a Reverse Mortgage ready to close and the borrower now wants to explore taking a regular "forward" mortgage. My first instinct was to convince them that a Reverse was better, but the truth is that in this case I just can't figure out what is better for him.

Here is the situation: The Borrower owes about $175,000 on a house worth about $900,000. They can qualify for about $400,000 from a Reverse. They only need about $50,000 right now for some expenses.

Assuming they can qualify for a $400,000 regular mortgage, the borrowers are telling me that they would prefer to take that because as they make payments their equity will grow, as opposed to a Reverse where their equity will decrease.

I analyzed both loans after ten years and this is what I came up with:

With the Reverse, if they only took the $50,000 (plus the $175K to pay off their loan and closing costs) out, after ten years, they would owe  about $500,000. I assumed that rates would stay near their historical norms and averaged them about 3% higher than today's.

With the Forward, they would get about $210,000 today, but they would pay almost $270,000 over the ten years in monthly mortgage payments. After ten years they would still owe about $330,000.

I am not sure what is better for them.

Any thoughts would be appreciated