NO NEED FOR A REVERSE MORTGAGE UNTIL YOU WANT THE MONEY

DEAR BOB: My husband and I (ages 73 and 83) have a lot of equity tied up in our home of 40 years. Because we will probably need money in the near future for living expenses, I've been trying to convince my husband to look into a reverse mortgage. But he tells me your articles advise not obtaining one unless the homeowners plan to stay in their home at least five years. Therefore, he is reluctant to consider a reverse mortgage because we don't need the money yet. My idea is to take out a reverse mortgage now, deposit 25 percent in a liquid account to draw on if needed and invest 75 percent in an insured account with high interest. Is this a good plan? --Lorna K.

DEAR LORNA: No. If you don't need the reverse mortgage money yet, I see no reason to obtain one now and start accruing interest on money you really don't need. However, this is a good time to shop among reverse mortgage lenders to compare the FHA, Fannie Mae and Financial Freedom Plans. You can choose to receive lump sum, lifetime income, credit line (except in Texas), or any combination of payments.

If you want to arrange a reverse mortgage now, the most popular choice credit line alternative makes funds available when you need them in the future, such as for a new roof or a trip around the world.

However, although interest doesn't accrue until you start using the money, not using the available money is an expensive choice because your up-front loan fee costs start accruing interest whether you use any funds or not. More details are in my special report, "The Whole Truth About Reverse Mortgages for Senior Citizen Homeowners," available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

Copyright 2006 Inman News