Originally Posted by cyber888
Although I don't like reverse mortgages and would rather downsize, it's like a 'back up plan' for some retirees who are house rich and cash poor, or for those who would never like to move again somewhere. It's an option in a worst case scenario.
Even then I think it's a bad idea. FIL is a good example. He owned a nice home that later sold for $268k and it was paid off, but his income was just under $20k/year. His health was declining and we were looking at options, at the time he would have been fine in an independent living apartment but we could see that probably wouldn't last long so were looking for a continuous care retirement community (CCRC) that he could afford.
Oh, and he couldn't drive anymore, couldn't afford the maintenance on a car and since we strongly felt he was unsafe driving we certainly weren't going to pay it for him.
At one point one SIL suggested a reverse mortgage to allow him to stay in the house longer, which he very much wanted to do. DW and I thought that was a very bad idea since it would drain away his equity that he would almost certainly need later for a CCRC.
Later on his heath declined further and he needed to move to the CCRC and we lucked out and found a good one nearby that had just opened a new building, eliminating a five-year wait list and had a dozen openings remaining.
Had he done the reverse mortgage, plus the expenses of long deferred maintenance and upgrades to the house, he would not have qualified for that CCRC, and he was quickly running out of viable options.
So my take on it is this: If the person has to take out a reverse mortgage to stay in the house they can't afford the house and they need to sell it while they still have options. If they don't, they'll still have some options but they'll be a lot fewer and not very good ones.