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There is a craze that is only about 4 or 5 years old with the banking industry, and that is reverse mortgages. As the homeowner pays a regular mortgage, the principle goes down and eventually, they owe nothing more on their property. In a reverse mortgage, the owner takes a paid for property, and the bank pays a monthly payment to the owner. It has been sold to (typically older homeowners) as a way to stay in the home they love and still have the life style they have dreamed about. What it really has done, is put a lot of elderly and unsuspecting homeowners into foreclosures. I'm sure all your banker friends will tell you the wonderful stories about the people they have helped stay in their homes and maintain their pre-retirement lifestyles. They never will tell you about the other side.

There are several problems with a reverse mortgage. The first is that it mainly targets the elderly. (Statistically speaking, they are the ones with paid for homes.) Therefore, the business is full of rip-offs and con-artists. If you think this is a good avenue for you to go down, be careful in selecting a company that will underwrite the mortgage. Secondly, Interest rates and closing costs are typically higher than other mortgages. Third, you are taking a paid for property and turning it into debt. Pay close attention to this next sentence. 100% of all foreclosures, had a mortgage against them. There has never been a paid for home, foreclosed on.

If you still think that this is a good idea for you, well, good luck!



If you click the title, it will take you to Dave Ramsey's website for more information.



Have a great day everyone!!