[retiredguy123]

Originally Posted by John_W

I took the Reverse Mortgage class from Citizens Bank a couple of years ago, they usually give it every other month at Palmer Country Club. Most people are aware that if you're at least 62 and own your home, you can get cash now, a reverse mortgage. It's about 45% of the appraised value. It was higher but in 2017 the government passed new laws requiring the banks to keep more reserves.

What I found interesting is you can use a reverse mortgage to purchase a new home. Let's say it's going to be your last home, you don't have any heirs you want to leave the home to, and it's your primary resident. If the home your buying is worth $300,000 with a reverse mortgage you put $140,000 down and don't pay another penny the rest of your life. You have that other $160,000 that you were going to put down now in your pocket to spend. You live in home, you essentially own the home, you pay the taxes and up keep, but you got it for less than half price. Then when you you die, just like a regular reverse mortgage the bank takes ownership and sells the home. If it sells for more than what you took out, your heirs get the difference.

Also I sold a home in Pensacola many years ago by owner, no realtor, no bank, no lawyer. The buyer and me went to a title company, I paid them $500 and he paid for title insurance and some doc stamps and stuff, and we were out the door in an hour. Easy thing to do in Florida. He could ordered an inspection, but since the home was only a year old, he didn't even have that done.

The only problem with the scenario you presented is that many people don't die while living in their house. They need to move into assisted living or a nursing home before they die. In that case, the bank can force them to sell the house before they may want to sell it, and they will lose a lot of money in reverse mortgage fees and administrative costs. So, if you can afford it, you are better off getting a regular 30 year mortgage with a 20 percent down payment and using the extra cash ($140K minus $60K) to make the 30 year mortgage payments. That way, you have a lot more flexibility about when and how to sell the house.