Terrified of Reverse Mortgage but husband is pushing it

[Doug Wegener]

To preface - I have the (prejudiced) opinion that all reverse mortgages are either scams or extremely unfair and hostile in their terms. OTOH my husband is sucked in and is pushing really hard to do it.

We have sold our house - and are buying a new construction, upper middle class house - cash - and he wants the extra cash (like $100K) to do improvements/upgrades and maybe live a little more luxurious (vs frugal). It makes a little sense - but I can't stop envisioning such a lien eating away equity - with terms that could force the instant sale of the house for some ridiculous lowball amount to edify the payoff. (read too many stories of this happening). It's not like we would ever default on taxes or maintenance etc. We are both 72 and have a very good Social Security income (and 401Ks etc.) More liquid assets than the proposed loan/lien amount. BUT many stories I've seen about people losing their houses due to medical issues - or the passing of one spouse - basically anything to force the sale of the house.

I've heard it's required by law to have counseling before getting one of these loans but I'm already being pushed towards applying/signing without any kind of discussion. The whole thing is very scary and we certainly do not NEED to do it. He is a very smart guy (retired CFO), but I don't get this at all.

He's saying the fees would only be $7,000 (to start) - not sure what interest rate. Not sure what to do.

I am the trustee of my sister's trust. Somewhere around 2008(if memory serves me right) she got a reverse mortgage due to some unfortunate circumstances in the family. She died in 2025. Over the life of the loan , the interest amounted to over $200,000, much more than the amount she got ($130,000 or so). Unless there are dire circumstances , I would not recommend it. .......There are alternatives. Hometap has a program where you share ownership with them and they benefit from the appreciation , and you continue to live in the property. I recently did an appraisal for them. You might check that out or similar programs with other companies if they exist. Despite what a celebrety says, I think HECM's are exploitive.

 

[Sadie]

I am the trustee of my sister's trust. Somewhere around 2008(if memory serves me right) she got a reverse mortgage due to some unfortunate circumstances in the family. She died in 2025. Over the life of the loan , the interest amounted to over $200,000, much more than the amount she got ($130,000 or so). Unless there are dire circumstances , I would not recommend it. .......There are alternatives. Hometap has a program where you share ownership with them and they benefit from the appreciation , and you continue to live in the property. I recently did an appraisal for them. You might check that out or similar programs with other companies if they exist. Despite what a celebrety says, I think HECM's are exploitive.

Both HECMs and Hometap type loans should be used only in emergencies. Hometap loans typically cannot be paid off in increments, only as a lump sum, within 10 years. But they have no minimum age limit. With either, if the borrower passes, the heirs are left with either diminished or no asset in the form of the home that was collateralized. Both have high fees and should be considered only as a last resort.