About four (4) years’ ago, I wrote an article against obtaining a Reverse Mortgage called “The Peril of Reverse Mortgages in Texas”. You can find it on this website.
A reverse mortgage is one of the quickest ways to lose your home to overwhelming debt which accrues as you are living in it via interests at roughly 8% annually, taxes and penalties, which leaves nothing to pass along to your surviving relatives. In Texas, you lose the ability to defer your taxes when you obtain a reverse mortgage. This is something normally not revealed to you when you create this mortgage.
However, there is a little bit of good news. You can undo a reverse mortgage but sooner is better (3 business days). If you wait too long, you will be put into the position of any other mortgage debt you have that requires paying off the debt which by then is generally higher than when you first entered into the agreement.
The sad part is lenders feed on senior citizens living on fixed incomes who are drawn to the idea of having a large sum of money at once that they can use to take a vacation with, do repairs or help with other monetary needs. As long as you are in the home and it is in your name, there is no need to pay the money back. However, upon your death or move to a retirement home or assisted living facility and the house is no longer in your name, the tax collector will execute documents to collect the outstanding debt.
My opinion about reverse mortgages is the same as it was four (4) years ago. I suggested not creating a reverse mortgage on your home in 2013 and that is still my suggestion. If you have been fortunate enough to have a home paid for and you want to will it to your children, then it is best you do not take out a reverse mortgage on your homestead.
“How to Undo a Reverse Mortgage” January 29, 2011 by Jack Gerard
“Can You Get Out of a Reverse Mortgage” (Author unknown)
“How to pay off a reverse mortgage” September 26, 2011 Ilyce Glink
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