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Reverse mortgage
Old 08-19-2010, 03:13 PM   #1
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Reverse mortgage

Currently owe 141,000 on my mortgage (20 years remaining) with monthly PITI payments of $908. The payments work out to 7.8% on the $141K remaining.

I qualify for a 168,000 lump sum reverse mortgage. I'd pay off the home and have 27,000 left over to invest. Taxes are not an issue.
Retiring shortly so the additional $908 a month not going out would be great.

I know the front end and interest with mortgage insurance is high, but no mortgage payments, no ridiculously high taxes on a 401K withdrawal (if I decided to go that route to pay off the house,) and doubtful I could earn almost 8% over the long haul. Don't care about leaving an estate.

sounds like a good deal to me. Is It?
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Old 08-19-2010, 03:21 PM   #2
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Quote:
Originally Posted by swodo View Post
Currently owe 141,000 on my mortgage (20 years remaining) with monthly PITI payments of $908. The payments work out to 7.8% on the $141K remaining.

I qualify for a 168,000 lump sum reverse mortgage. I'd pay off the home and have 27,000 left over to invest. Taxes are not an issue.
Retiring shortly so the additional $908 a month not going out would be great.

I know the front end and interest with mortgage insurance is high, but no mortgage payments, no ridiculously high taxes on a 401K withdrawal (if I decided to go that route to pay off the house,) and doubtful I could earn almost 8% over the long haul. Don't care about leaving an estate.

sounds like a good deal to me. Is It?
I don't know. But I would at least see what you could get with a refinance. Then you could compare the reverse mortgage to a cheaper regular mortgage.

Ha
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Old 08-19-2010, 03:29 PM   #3
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Originally Posted by haha View Post
I don't know. But I would at least see what you could get with a refinance. Then you could compare the reverse mortgage to a cheaper regular mortgage.

Ha
That is a good idea considering mortgages -30yrs- are under 5%.

Also, are you sure you will see the 27K? I've read that the fees on reverse mtgs can be high.

Also, income taxes (401k) are probably lower now then they will be in the future. I'm not suggesting paying off the house with a withdrawal from the 401k but you could look at taking out enough to stay withing the lower tax brackets and use the money to pay the loan off faster.
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