Reverse Mortgage Guide

I was greatly interesting in an article I saw in the South Florida Times.

The author, Robert Henderson, was discussing the case of “Mrs. Ruby,” age 78, a woman with five children, 15 grandchildren and 30 great grandchildren –”all of whom,” says Henderson, a Certified Financial Planner and author of The New Underground Railroad, “visit her during holidays.”

Ms. Ruby has owned a home in Miami for 50 years and Henderson explains why in her situation a reverse mortgage makes financial sense:

“Mrs. Ruby is living on a fixed income. Her home is paid off, but property taxes and insurance costs have skyrocketed in the past few years.

“Mrs. Ruby borrowed all she could on her credit cards (the creditors are now calling), and was facing foreclosure on her home within 60 days.”

Henderson also writes the following:

“Why wait until you’re dead to use all of that built-up equity in your home? You can have your cake and eat it now.

“What good is having a home with no mortgage, but living broke and in misery?

“Trust me, if you don’t use it, as soon as you’re dead, your grown kids will! Good, unselfish children want to see you living well while you’re alive now. There is no sense in spending lots of money on you when you’re dead.

“When was the last time you’ve been on a cruise? Or have you ever? Remember, you can’t take anything with you when you die. Now is the best time, especially since real estate values have skyrocketed in the last 6 years.”

Henderson suggests the use of a reverse mortgage for Ms. Ruby and it’s probably the best choice at this time.

That said, I read this and wondered: With such an extended family, would it be possible to collect $50 a month from each child and grandchild for Mrs. Ruby? It would seem as though each of these individuals is of adult age and 20 people x $50 would be $1,000 a month. Perhaps some could comfortably contribute more.

In return for their help, Mrs. Ruby could provide in her will that each would get a 5 percent interest in her home. So in addition to good feelings, there would be a shared financial reward as well — one which is likely to be tax-free.

In other words, I wish Mrs. Ruby had met with Mr. Henderson five or 10 years ago to organize such an arrangement. With a little planning there could be more inter-generational wealth, no tax worries and no credit card debt. That sounds like a good thing to me.

For the full article by Mr. Henderson, please go to FINANCE: Mrs. Ruby’s Victory

This entry was posted on Wednesday, March 5th, 2008 at 3:50 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.