Would You Do A Reverse Mortgage?
Are reverse mortgages a good idea, especially for aging parents?
ANSWER: It’s a really bad idea for elderly people who have a paid-for house to borrow on their house. That’s basically what a reverse mortgage is.
With a regular mortgage you make payments and the balance goes down. With a reverse mortgage, you receive a monthly payment and the balance goes up. You’re borrowing more and more each month, and it’s a scary equation for the elderly. A paid-for house gives an older couple a lot of peace.
They should live on a tighter budget or sell their current house and move to a more affordable house so they have more money for the things they want to do in their retirement.