With declining housing market conditions, is it a good time for my mother-in-law to get a reverse mortgage?

Answer 1

First of all, i would like to correct another answer by saying that the home with a reverse mortgage on it will remain part of your Mother's estate. At the time of her passing or if she sells the home, the reverse mortgage lender simply wants the loan paid off. For example, if your mother passes and her RM balance is $100,000 and the house sells for $150,000, the lender would receive their $100,000 payoff and the other $50,000 would go to the estate. This is exactly the same as with any other mortgage.

To answer your main question, if your mother needs the money she should not worry about value as long as she has enough equity to make the RM work. If she can wait for the market to rebound, she would be eligible to receive more money. Also, the expected interest rate on a RM is 5.53 this week. The floor is 5.50 so it cant get much better.

The general rule of thumb for a reverse mortgage is the more the house is worth, the lower the rate, and the older the borrower is the borrower can borrow a higher percentage of value

Answer 2

1. Market conditions are not declining in many locations. Maybe where your mother-in-law lives or maybe the prices are not rising as fast (vs. actually declining).

2. That said what difference will it make on a reverse mortgage? Unless the decline is going to be very long term the reverse mortgage products already build in a cushion for temporary bumps along the way.

I sense that there is something more behind the question. Please add a comment to better explain what you are thinking. That way you will get more precise answers.

Answer 3

The best answer will depend on your mother-in-law's need for income and perhaps her state of health. Realize too that once this decision is made,that her home will no longer become a part of her estate.

Answer 4

I have been getting calls asking if iam interested in refinancing my home.