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No. Totally different. A reverse mortgage pays you in monthly installments and leaves a mess for relatives to mess up once you are no longer able to live in the house. I would never recommend someone get a reverse mortgage.
Don't forget the $5,000. closing fee on a reverse mortgage and all the upgrades to the house's systems you have to make, with the proceeds, to qualify. Most reverse mortgages are not at all feasible on older homes, that need a lot of upgrading. The mortgage agency may be the only one to profit from it.
Don't forget the $5,000. closing fee on a reverse mortgage and all the upgrades to the house's systems you have to make, with the proceeds, to qualify. Most reverse mortgages are not at all feasible on older homes, that need a lot of upgrading. The mortgage agency may be the only one to profit from it.
Considering the bunch of Reverse Mortgage ads on TV with paid celebrity endorsements, that's all the more reason to stay away from them. I believe they are a scam. It costs a lot of money to run those ads and pay those spokespeople and they wouldn't be doing it unless it was in their own best interests.
I don't do reverse mortgages, but I do disagree they are evil to all. In the right situation they can be an excellent solution for their quality of life is a priority (as opposed to offspring inheritance). They are not cheap, but they do prevent the parents from taking on more monthly payments.
Before consulting someone in elder law, I would find a financial planner that specializes working with retirees, someone the understands the rules for various programs.
I agree with the earlier comment, never trade unsecured debt for secured debt. (The only principal that takes priority to that rule is never place a lien against your primary residence for a 2nd home or investment property).
Having a high LTV with no contingency plan if the house needs to be sold, is usually unwise, especially if the payments are too much of a stretch for the household income. Having a HELOC does not automatically mean you will be upside down and facing foreclosure!
A HELOC may not be good for you. To say they are a bad choice for everyone is a real stretch.
I agree.
We carry a HELOC at 10% of our homes value. We pay twice the monthly amount due, meaning that we are paying down the principle at an accelerated rate. I have had no second thoughts about this transaction in the least.
Now for someone that is close to being upside down on their home, well that's a whole different story!
a HELOC would, in theory, be at a lower rate of interest - and likely tax-deductible - than credit card and auto debt.
problem here is ability to qualify for the HELOC at a bank, both from an income/credit perspective, as well as it not being their primary residence right now.
to say "all HELOC's are stupid" without considering any facts of the situation discussed is simplistic, to put it nicely. Heck, we don't know how the OP arrived at the value of the TH, what they paid for it, etc. If they bought it 2 years ago for $250K and it's inflated to $450K, then certainly caution is warranted to exceed a $250K loan balance.
But people never lose their house because they owe too much, especially as a %. They lose their house because they don't earn enough to pay the loan back as they agreed to.
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