I'm not going to go all Robert Wagner on you all and push reverse mortgages, I just wanted to mention a few thoughts on when I would recommend such a product.
If someone is over 62, and facing foreclosure, a reverse mortgage is practically a godsend. In these times where lending guidelines are so strict, even low loan-to-value deals have no home if you have mortgage lates on your credit. Add to the situation a job loss, or some other negative circumstance and you are SOL in most cases. BUT, a reverse mortgage doesn't take those credit issues into account- after all, they don't count on you to pay any mortgage payments, they 'pay' you.
This is the ONLY time I would actually recommend a reverse mortgage- they are just so costly to the homeowner and their family.
For some people with plenty of equity and good credit, taking out a mortgage to place in a trust or a special bank account for living expenses would be just as good, if not better, than the 'government-insured' reverse mortgage set-up.
Here's a quck overview on the HUD website about reverse mortgages:
http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm
Has anyone dealt with situations where a reverse mortgage has been the right thing to do, other than when someone is facing foreclosure? Perhaps I'm overlooking a value of the program, educate me! :)
Obviously, if someone cannot qualify for conventional financing, this product should be on the table- but under what other circumstances should I recommend it?
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