Woman Thinks Reverse Mortgages Are a Scam, but 'My Husband is Sucked in and Is Pushing Really Hard to Do It'
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A difference in financial philosophy has put a couple at odds.
One spouse views a reverse mortgage as a predatory "scam," while the other, a retired chief financial officer, sees it as a tool to unlock $100,000 in cash for home upgrades and a more comfortable lifestyle, as detailed by a Reddit post.
A reverse mortgage is a home loan for homeowners who are 62 or older. It allows homeowners to borrow money without making mortgage payments. The balance is paid when the borrower dies, sells the home or moves out, according to the Consumer Financial Protection Bureau.
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The disagreement highlights a common consumer protection concern surrounding reverse mortgages, particularly regarding transparency of costs, the risk to home equity and the legally mandated accounting process.
"My husband is sucked in and is pushing really hard to do it," she wrote.
The couple, both 72, are in a secure financial position, having just sold their previous home and planning to pay cash for a new, upper-middle-class construction house.
They also report having a "very good Social Security income" and ample 401-(k) and other liquid assets — even more than the proposed loan amount.
The husband's motivation is to access extra cash for upgrades and a slight increase in their standard of living, moving away from a "frugal" approach. He cited starting fees of $7,000, though the interest rate remains undisclosed.
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The wife's apprehension stems from a common concern regarding reverse mortgages: the potential for the line to "eat away equity" and predatory terms that could lead ot the forced, low-ball sale of the house.
"I can't stop envisioning a lien eating away equity — with terms that could force the instant sale of the house for some ridiculous lowball amount to edify the payoff," she wrote.
Despite their solid financial habits, she is haunted by anecdotes of people losing their homes as a result of unforeseen events like medical issues or the death of a spouse, which can trigger a mandatory repayment event.
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