Hi Roberta z5, It's been almost 2 years since you made this post. I'm wondering whether you found the information helpful, and what you decided to do, if you feel comfortable with sharing some of the information. While reverse mortgages are useful for some, there are more expenses associated with setting them up, and a number of restrictions ... possibly higher ongoing costs, as well. I have a bias, in that I like to run my own show. Since you're on a farm, I suspect that you may well follow similar paths of thought. I think that in a situation like yours, considering the amount of information that you have given, I would like to approach my financial agency to see whether I could set up a Home Equity Line of Credit with them. I have never owned a home (as I've lived in about 22 locations in 79 years, the real estate people would have loved me, had I done so). For several years I've had a Fully Secured Line of Credit, backed by mutual fund certificates, which the carriers issued to me at no extra charge, and stock certificates (which cost me $35. - 50.00 each to have registered). There was no cost to set it up, but when using real estate as collateral, there usually are fees for inspection and evaluation, plus investigation regarding other liens and possibly lawyer's fees on such property when so used. For most of the time I have let it lie unused, and they charge me no inactivity fees. My credit limit varies depending on the current value of the underlying assets ... which is easily ascertained in the case of stocks and mutual funds, less so when one uses real estate as collateral. But long-term real estate values have risen in many areas: if I were to use a reverse mortgage, I'd want to know whether, had there been appreciation in value of the property in the intervening years prior to sale on my departure, whether that increased value would accrue to me (or at least partially so). The interest rate varies depending on current rates ... for some time up until several months ago it was 6.25%, then was down to 5.75% for a while, then a few months ago went down to 4.75%. When it was at 6.25%, I said that I could borrow to invest at almost nil cost ... 25% income tax deductibility reduces it to under 4.7% (20% reduces to 5.0%). If I invest in a Canadian bank, pipeline, or other high quality stock, paying about 3% dividend that, being substantially tax-advantaged, leaves me with about 2.5% after-tax income, that reduces my net cost of the interest expense to under 2.5%. If my deal with the bank is that I pay interest-only monthly on the loan, which I don't ordinarily recommend, as I like to see debt reduced, let's say that I leave a $10,000. loan run for 15 years. When I go into the bank to pay off the loan, how much will I have to pay them? Exactly $10,000.00 ...which is precisely the amount that I borrowed, 15 years ago. Which would have bought a decent car, 15 years ago ... but not now. I gained from inflation ... and the guy who got a Guaranteed Investment Certificate at the bank for that $10,000.00 over those years ... gets his interest (rent on the money) over the years between ... and when he collects the funds ... gets precisely $10,000.00, the same amount that he gave the bank, those years ago. That will buy a lot less now. I gained from inflation - he lost. And inflation has been running at about 2% (higher for some of the basics that poor people must have). Now that the interest rate that I must pay is 4.75%, deduct 20% income tax deductibility reduces it to 3.8% (25% income tax takes it lower), deduct 2.5% after-tax dividend income on the shares reduces my cost to 1.3% ... and inflation is a lot higher than that! However ... ... since U.S. gov't. (and individual) debt is so high (and going higher, year by year), I fully expect that soon they'll have to offer higher rates of interest in order to seduce foreign lenders to buy more of their debts ... adding to that mountain. Before you sign on for a Reverse Mortgage ... make sure that you are entirely familiar with every one of the provisions ... and run them by your lawyer to make sure that you're aware of all of the parameters. Don't want you being subject to unpleasant surprises later ... when it's too late to alter the provisions of the contract. Good wishes for making wise decisions regarding efficient use of your income and assets. ole joyful

Hey Gina, sorry I didn't see your post for a few days. The basic idea behind a reverse mortgage is, as Joyfulguy said, that it can help a retired person who has limited income but a large asset in the form of a home. Typically when the person dies, the reverse mortgage would be paid in full in a lump sum by the person's heirs, who would sell the home, pay off the mortgage, and keep whatever proceeds of the sale, if any, are left over. You said your boyfriend lives with you. I assume his "official" place of residence is at the house where his parents live. It'd probably have to be, because most lenders will only do reverse mortgages on owner occupied homes. This fact that he doesn't really live there would seem to be somewhat of a gray area, and might be something you want to discuss candidly with the lender, because in most cases the loan is payable in full if the person moves out of the house. What if he decides he wants to buy some other house to live in, say, if your relationship with him ends? Then he's got a problem because he has to pay off the reverse mortgage in order to do that, probably. Here's the other thing: You didn't say how old your boyfriend is, but since his parents are still around, I'm going to assume he's not all that old, and since both of his parents are living, he probably has decent longevity genes, too. So, he's going to be around for a while. That limits the value of a reverse mortgage, and will restrict the amount a lender will lend on one. I assume what he's thinking is that with the reverse mortgage he can take an advance against it, pay off the balance still owed on this house, and then get a check every month instead of writing one every month. That sounds good, but that's not free money - it's all borrowed money that he's paying interest on, and when he eventually does sell the house, it just reduces what he gets from the sale. Just from the facts as they appear here, it does not seem as though a reverse mortgage is going to do that much for your boyfriend. His borrowing ability will be reduced because he's not that old, and if he winds up paying the mortgage off himself because he sells the house someday, then he's going to have to pay off a bunch of interest just to have a clear deed to the house. Then, too, doing the reverse mortgage now when he apparently doesn't really need to do it means he will not have that option later if he does really need it. Right now he's got $210,000 in equity in a house and he's got many years of life left. Why start chipping away at that equity by paying ever-increasing interest on a big reverse mortgage balance? I can't think of a good reason to do it. When he's 80, there may be a much better reason to do that, and it'd be nice to have that option then rather than to use it now.

Can he get a reverse mortgage even though he owes more than it's worth? No. There is no equity in the property. What type of professional should I seek for advice on his overall financial situation? Assuming he has funds for any professional, a Certified Financial Planner might be of help. They charge a fee for planning and advice only; in contrast to many other "financial planners", they don't depend on commissions for selling financial products. An annuity, purchased for the liquidated value of the other assets he is disposing of, will be one route you should be considering.

To try to make it clear..my point was that this man was wealthy, yet he entered into a reverse mortgage on the home that he had lived in all his life. I think of a reverse mortgage as something home owners do when finances are tight. For whatever reason, the bank in this situation had paid out more than the home was worth at the time of Andy's death...probably because Andy even though he signed a contract to do so, put no upkeep into it in the 25 years or so of this RM. Our government guarantees these 'loans' so that the lender cannot loose in situations like this. That would be tax payer's money, yours and mine. The relatives of Ann and Andy inheritated the rest of the estate as they should have. It just seems wrong to me in cases like this where the home owner has the means to do right, but dosen't, that we the taxpayer gets the bill.