Community Forums

BlueGekko · 02-20-2012, 08:37 AM

Newbie wannabe here. I'm 60, she's 65. We're in the initial stages of planning for our retirement roadtrip. Our retirement income (military and SS) is approximately 60% of our pre-retirement income. Annuities won't kick in for another 8 yrs. We'll need to upgrade from a Class B to a Class C for 6+ months on the road. We plan to close down the house for the duration. We have SOME money socked away in liquid accounts but I'm not comfortable that it is enough to deal with unforseen personal/vehicle emergencies on the road. I'm researching a reverse mortgage for $100k but don't know anyone who has done this. Any experience out there? Any reasons to do/not do? HUD website gives very general info but not helpful for details. Wife has severe reservations about it so will have to convince her it's a good idea or convince myself that it's a non-starter. Any help?

RickO · 02-20-2012, 08:48 AM

Welcome to the forum. Sounds like you're planning quite an adventure.

You might want to browse through our RVing on a Budget forum RV'ing On A Budget - iRV2 Forums for some ideas. As for a reverse mortgage, we discussed it with our financial planner a few years back and his input was that they are VERY expensive and would only recommend them for very elderly folks with few options.

Best of luck.

Rick

bsirby · 02-20-2012, 09:00 AM

Hello and welcome to the forums. I looked at the reverse mortgage and found out real quick we can't do it. If the mortgage is joint like ours, both of you have to be 62.

BlueGekko · 02-20-2012, 09:00 AM

Thanks, RickO. I've read quite a few of these and other budget forums. Got a lot of good ideas but none have addressed the reverse mortgage issue. I understand that the upfront cost of a reverse is pretty much in line with a conventional mortgage. Why did your advisor believe the reverse is for the very elderly?

decodancer · 02-20-2012, 09:11 AM

Would either of you be willing to work along the way? Check out the workers on wheels website, lots of ideas to make money while traveling. I'm going to work for KOA starting in June, so I plan on seeing the country slowly while working 3 or so months in each area. Good luck!

BlueGekko · 02-20-2012, 09:13 AM

That's true, Bsirby. As I mentioned, we're in the planning stages. If the reverse is a viable option, we could rely on/use present savings/liquid assets and replenish with the reverse in 2 yrs.

BlueGekko · 02-20-2012, 09:19 AM

Yes, decodancer, workamping is one of the options and I've read extensively about in the various forums and have subscribed to the Workamper News. Nothing is ruled out but still, I'm a little queasy about embarking on this drastic change of life without a comfortable financial safety net. After 45 years of working in the traditional employment market, it's counter intuitive that life can be the same on the road. Yes, I could always come home if the funds run out but the employment market is pretty tight here in the North East and especially in town where 95% of employment is retail and/or hotel based.

ottffss · 02-20-2012, 09:20 AM

1) Of all financial instruments, a reverse mortgage just about takes the cake for the highest fees/cost.

2) Read the microscopic print, if you pass before the reverse term, make very sure who gets the remainder - likely (I'll just about guarantee) it won't be your family.

tncruiser · 02-20-2012, 09:24 AM

the way i understand a reverse is upon your vacating the house or your death you must satisfy the balance of the loan. it can create a real mess for your heirs anc closing costs and interest rates are HIGH
brianj

BlueGekko · 02-20-2012, 09:25 AM

Hmmm, ottffss, that would be a bummer.

BlueGekko · 02-20-2012, 09:30 AM

Tncruiser, as I understand it, if I eventually sell the house, we pay back the reverse mortgage. Not a problem, lots of equity in it. If my wife and I both die at the same time, my heirs sell the property and pay back the reverse mortgage. If one of us dies, the other doesn't have to pay back until I/she sells or dies. Correct me if I've misunderstood these provisions.

ottffss · 02-20-2012, 12:34 PM

Blue: EVERY rev mort product is different. YOU MUST understand (not just read) the fine print of every policy you look at. It is best to shop/review/read these policies with an accountant in tow. Reverse mortgages are NOT anywhere as standard as a conventional mortgage is. Reverse mortgages are intertwined with "life-insurance-like" complications making them far more complex. Rev morts are not generic/standard/nationwide-all-the-same financial instruments. You must understand the fine print in the specific policy what you are buying. If tncruiser has a policy, he is speaking about that particular policy and ONLY that policy from that particular issuer.

Absolutely there are situations where a rev mort can be useful and I use that term deliberately. There is never a situation where a rev mort is "profitable," that is, easy or favorable on your bottom line. The fees are always astronomical and the "life insurance aspects/benefits" tend to go in the favor the issuer, not you.

As an alternative, you might consider selling your house with a lease/rent-back clause as a far better financial approach - if you can find a buyer (which should be easy these days). This way the full fair market value cash is in YOUR hands/control from the get go.

Steve N Sal · 02-20-2012, 12:48 PM

Welome to the forum. Sounds like quite the adventure you have planned. Regarding the reverse mortgage I don't know if the income you would generate at this age would be worth doing it. The older you are the more you get do to life expectency. Good Luck on whatever you choose and hope everything works out to the positive side of things. Enjoy your travels.

BlueGekko · 02-20-2012, 12:59 PM

Ottffss, it's clear (not unlike a conventional mortgage) that reverses can be complicated and that there are likely issues associated with them that I'm not familiar with. That's the reason I've posted the question and had hoped someone could relate their experience. Don't much care for the idea of jumping into the water without looking first. So far I've understood that these things may really be meant for folks much older and (possibly) much closer to the end of their warranty period, not for those who anticipate another 30+ years of warranty. Aside from winning the lottery, I guess there's no "easy" way to quit life and go walkabout on wheels.