Reverse That Mortgage Idea
Peter is negotiating a reverse mortgage. He's been out of work for two years and owes $15,000 in back taxes on his home. It's worth $320,000, and he owes $50,000 on the mortgage.
QUESTION: Peter in Canada is negotiating a reverse mortgage. He doesn’t believe he has any other options. He’s been out of work for two years and owes $15,000 in back taxes on his home. It’s worth $320,000, and he owes $50,000 on the mortgage. Dave tells Peter his real problem is a career crisis.
ANSWER: If the only option you have is to make an unwise decision, you need to make a different decision.
You have a career crisis first and foremost. A reverse mortgage is an absolute ripoff. You need to stay completely away from those things, particularly in this case. You’re trying to treat this symptom. The problem is your career crisis. The associated problem is the taxes.
There are no good reverse mortgages. You won’t hear me recommend that you do this anywhere in this conversation. I don’t think I can help you, nor am I going to. I’m not going to help you participate in something that you know is unwise. You either need to get some income coming in by changing career directions and/or maybe a new mortgage for $65,000 with a bank on a $320,000 house.
Another possibility is there, and this is hurtful, but to sell the house and buy a home for $200,000 in cash. I would not take out a reverse mortgage under any circumstances and I’m not going to help you pick out a bad product. It’s like calling me to ask what the best credit card is. I’m not going to do it—not because I’m mad at you, but I’m not going to participate in you doing something that we both know is unwise. That’s harmful to you, so don’t do it.