I am considering taking out a reverse mortgage on my home. I am 72 years old and recently widowed. The house was built in 1953 and has an existing mortgage of a little over $288,000 from a refinance needed to put in new windows, siding and a new roof among other needful repairs. According to my daughter, the house is listed on Zillo at $325,000.
My husband left me a little over $200,000 in life insurance
which is obviously not sufficient to satisfy the mortgage. I will be getting a rise in my Social Security payments and I believe something from the pension into which he was paying at the time of his death (he was still an active employee
). Unfortunately, I don’t know the amount of that yet, but certainly between the monthly payments I am making for ordinary expenses (utilities, credit card debt etc.) and the $3,000+ monthly mortgage amount, this money will be eaten up long before the mortgage is satisfied. At that time I will be forced to sell my home and deal with trying to find living accommodations, not easy in these times or on Long Island where I presently live.
I have cut down my monthly expenses greatly. I no longer have my husband’s car and the expenses it incurred including the car loan
, gas etc. He had several credit cards in his name which he ran way up; these have now been declared closed by the credit card company after I handled the matter with your assistance. The only real threat to my financial situation is the mortgage and a reverse mortgage will clear that up. And I should certainly have enough to pay the taxes and the house insurance required in a reverse mortgage situation especially as I continue to cut down on my monthly outlays.
I went to a seminar and learned about the matter and it appears that there are no real pitfalls in doing this. I must live in the house (which I intend to do) and the reverse mortgage must be satisfied only after I have been out of the house for a year (in a nursing home or some other situation). At that time, I will have a year to sell the house to satisfy the mortgage and frankly, given that it takes about five years to actually foreclose on a mortgage, that means I would effective have SIX years to sell the house. Of course, if I die, to be honest I really won’t CARE what happens, so I do not intend to concern myself with that situation.
At the seminar I was also informed about how to go about getting this mortgage including “up front” out of pocket costs – the “FHA counseling and the need for an evaluation on the home – both of which I can afford and both of which the company giving the presentation reimburse at the time of closing.
Frankly, I can see no drawback in this plan other than finding out that I do not qualify for some reason which I would assume would have to do with the size of the outstanding mortgage and the value of my home. I can live on my income backed up by my husband’s life insurance as long as I can get rid of the existing mortgage in a reasonably short time before it makes too many inroads on the money I have from his life insurance – something that a reverse mortgage will certainly do. I cannot guarantee that there might not be some problem in the future, but at 72 I don’t have that much “future” and certainly if the current mortgage remains in place, I can be assured of running out of money perhaps before I run out of life.
I need to know if I am missing something that would make this option problematic. Obviously, the gentleman making the presentation was very “high” on it; that is to be expected. However, he was asked a lot of hard questions and seemed to have all the answers. There are no guarantees in life, but as I consider the existing mortgage to be my biggest problem and I do not have sufficient funds to satisfy it myself, this seems to be the best way to find peace of mind in my old age. I need to know if I am missing something that I should know before I go further.