A reverse mortgage isn’t an arcane concept for me. I’m 62 years old, the minimum age to get a reverse mortgage, and recently lost my job. I’m fortunate to have adequate resources to last several years before I start drawing from Social Security or my 401(k).
But I won’t be able to make it to age 70, which means I won’t maximize my monthly Social Security payment. In addition, like all retirees, my 401(k) would be devastated if the market declines right as I begin withdrawing money from my account.
We have a paid-off house, and a reverse mortgage could help us secure our future income. It could also come in handy if one of us needs long-term care at some point.
Will I get a reverse mortgage? I doubt it. The thought of paying $20,000 or more in various fees for a line of credit I may or may not tap for a good while puts me off. Plus, I’m pleased to be living without a mortgage for the first time in my adult life. The thought of taking out a loan, even one that I likely wouldn’t need to repay in my lifetime, makes me uncomfortable.
I’m not alone. Barry Sacks, a reserve-mortgage researcher, says many other people look forward to that day when their traditional mortgage is paid off and they’re “free.” That’s the biggest reason they won’t consider a reverse mortgage, he says.
Sacks goes on: “But a reverse mortgage requires you to make no payments, and you’re still free.”
Sacks practices what he preaches. The 80-year-old owns two houses in the ultra-expensive Bay Area of California. His San Francisco house is paid off but he took out a reverse mortgage on his Sonoma house because he could no longer afford $50,000-a-year mortgage payments after he retired as lawyer.
“I somehow assumed I could chug ahead and have plenty of income to sustain that payment,” he said. “But I didn’t.”