Drob - you are correct the banks are in it to make money.
Supervt - Reverse Mortgages have been around for at least 20+ years. I agree AARP has some of the best and the most information regarding this type loan.
They are designed to "allegedly" to "help" the elderly. I have seen some cases where I have closed this type of loan and from all appearances, it would help the person(s) that were pulling the loan. Of course the truth in who is making out on the loan is dependent upon how long the individual lives once they pull the loan.
Yes, they only loan about 62% or 65% of the value of the property at the time of the loan. Advantage is, as long as the person borrowing is alive and living in the home, they do not have a mortgage payment nor do they ever have to repay the loan, unless they refinance it.
If they move out to a nursing home or to live with a relative then the property goes to the bank. If it is a married couple taking the loan, as long as either one is alive and living in the home, it is theirs to live in with their usual expenses minus the mortgage payment. It's a great way to spend the kids inheritance.
If the loan is never refinanced, the mortgage matures on the person's 150th birthday or their death, whichever comes first. The borrower does go through counseling before the loan is processed and the loan documents are signed. Now we all know, no one counseled on how the money is generated for the loan and never will be.
Reverse Mortgage-Too Little,Too Late
