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Thoughts on reverse mortgage to supplement retirement benefits?

#1
I'm a retiree, nearly 70, and would like some opinions regarding reverse mortgages.  The rules have recently changed and I'm trying to determine the suitability to augment my retirement benefits.  We have no children and our current home is appraised at $1.2 million.
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#2
I don't like them one bit. BUT that doesn't mean they are wrong for you. Define augment. If you are short of cash after SS/savings/investments, perhaps.
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#3
(11-22-2018, 02:52 AM)Ybserp Wrote: I don't like them one bit. BUT that doesn't mean they are wrong for you. Define augment. If you are short of cash after SS/savings/investments, perhaps.

Perhaps it would be useful to know why you don't like them one bit.
We like our current home and we are living comfortably but not excessively.  I have retirement benefit from PBGC but it's only 30% of the planned benefit prior to the termination of a DB retirement plan.  My main source of retirement flows from my traditional IRA which is taxable.  I got a tax benefit when I funded my 401K but each withdrawal is taxed.  I'll begin drawing SS on my birthday.  The reverse mortgage is non-taxable.  The reverse mortgage looks appealing because it would allow me to stay within the confines of a 4% IRA withdrawal rate. 
So, I'm looking for pros and cons so I can make a measured decision.  Particularly useful would be comments from anyone who actually has a reverse mortgage.
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#4
Any loan when the balance increases over time as interest on the loan and fees accumulate is fundamentally unfavorable. Plus as home equity is used, fewer assets are available - but I do realize this is minimized because you have no heirs. Fees are higher than with a traditional mortgage. The loan becomes due and must be repaid when some type of specified “maturity event” occurs, such as the last surviving borrower (or non-borrowing spouse meeting certain conditions) passes away, the home is no longer the borrower’s principal residence, or the borrower vacates the property for more than 12 months. The loan will  become due if the homeowner fails to pay their property taxes or homeowners insurance, or fails to maintain the property (which typically applies to any mortgage). I am not claiming to be an expert, just my opinion. Not sure if the rule changes impact these things.
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#5
Why would you not do a reverse mortgage? You can not take the home with you, just enjoy the money while you still have your health. Unless you have some other relatives, neighbor or charity that you would like to rain some money on upon your demise - not a bad choice either, just a choice.
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#6
(11-29-2018, 11:14 AM)Kwill Wrote: Why would you not do a reverse mortgage?  You can not take the home with you, just enjoy the money while you still have your health.  Unless you have some other relatives, neighbor or charity that you would like to rain some money on upon your demise - not a bad choice either, just a choice.

I think, even allowing for the repayment of the reverse mortgage and associated fees, there should still be more than adequate principal left when the house is sold.  I'm still hoping to hear from anyone who has a RM and thoughts on choosing an appropriate lender.
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#7
(12-01-2018, 03:41 AM)norabird Wrote:
(11-29-2018, 11:14 AM)Kwill Wrote: Why would you not do a reverse mortgage?  You can not take the home with you, just enjoy the money while you still have your health.  Unless you have some other relatives, neighbor or charity that you would like to rain some money on upon your demise - not a bad choice either, just a choice.

I think, even allowing for the repayment of the reverse mortgage and associated fees, there should still be more than adequate principal left when the house is sold.  I'm still hoping to hear from anyone who has a RM and thoughts on choosing an appropriate lender.

You can beat em with a simple strategy: aim to live as long as Methuselah. If you live a long life & have no heirs this is absolute home run strategy. I have an uncle with no kids who lived well into his 90s and his Reverse  worked tremendously for him.  Got an extra check for a good length of his life. No downside for him. 
 
Heirs?? Plans to pass on estate to some  entity?   Entirely different story. Expensive and not so appealing imo.
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#8
As much as I enjoy our home and like the flexibility of home ownership, before I would consider a reverse mortgage I would consider selling our home and investing the money. I would then rent a home in our area (or some other area) that suits our needs. This approach would give me a great deal of flexibility, especially if I get to a point where dealing with home ownership is a royal pain. I have helped an older family member downsize and sell a home when she no longer could do that.
 
One of the ways I helped her was to sell her home and move her to an apartment where all of the things she used to have to deal with were no longer a concern. It also dramatically reduced her housing costs and gave her a better place to live. A reverse mortgage would not have helped her and it would have made her on-going care more complicated as she ages. If I was considering a reverse mortgage I would have a lot of "what if" questions that I would want to see answered in the fine print.
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