Information and Articles on Reverse Mortgages

Real Estate Mailbag
by Robert J. Bruss

Dear Bob,

My 80 year old neighbor is mentally sharp and owns a lovely home that is paid for. She says she is running out of money. When I suggested a reverse mortgage she said her son is opposed. He says that when she dies the reverse mortgage lender takes the house and nothing is left for him. Is this true?
Renay W.

Dear Renay,

No. The son is mistaken, greedy or maybe both. When a senior citizen receives a reverse mortgage the lender receives a first mortgage lien on the residence. As the years go on, the reverse mortgage balance grows as the homeowner receives payments. No monthly payments to the lender are required during the homeowner's lifetime.

At the time of the homeowner's death, or when she decides to permanently move out, the reverse mortgage matures. That's means it's balance must be paid in full. Any remaining equity goes to the homeowner or the homeowner's heirs.

Suppose your neighbor's house is worth $400,000 and at the time she dies or moves out she has received $150,000 from the sales proceeds and keeps the remaining $250,000 cash for the equity.

Robert J. Bruss is a real estate author and columnist. To contact him go online to www.bobbruss.com