I have never heard of this either and reading the details made my head spin.
I am more familiar with the odd French system of the 'viager' where old homeowners sell their homes for a reduced price. They proceed to live in the house until they die, free of charge. It is a complete gamble for the buyer, who might get the house in 2 years or in 20 years. The most famous case was Jeanne Calmant, who lived to be 122. She outlived her buyer by several decades.
They seem to be very common in Florida with the older set that is trying to get out from under an home that their retirement finances don't allow them to keep unless they have additional income that the reverse mortgage provides. Most I've read here advise against such a mortgage as one seems to get screwed coming and going. Florida newspapers should be full of this information. Google search the Sun Sentinel, Miami Herald, Palm Beach Post and others. A financial advisor would be someone to talk to too. To my understanding, this is unlike a viager in that a 3rd party is not involved. The institution that holds the mortgage gets the property. I can't imagine what pros you've heard.
By the way. . . .what about the second binge session of Peaky Blinders?
The pros I've been told are it is an option for people like my husband and I who have paid off our pre existing mortgage, have no heirs, and presently we are in fairly dire financial straits with no relief in sight.
(Peaky Blinders Season 3 is every bit as brilliant as 1 and 2.)
My highly intelligent daughter in law is a CPA. When I raised the subject of reverse mortgage with her, she just gave me a sideways glance and said, "uh uh...Don't go there." I do not know why but I believe many older people are getting poor advice from the financial institutions.
Travel! Set out and head for pastures new[br] Life tastes the richer when you’ve road worn feet.[br]Ibn Battuta[br]
I do not know of any one who has personally done it as of yet. My brother-in-law and his wife are seriously considering it as they have no heirs either and see it as a way to travel in their retirement while still living in their home. From what I understand, depending on an assessment of the property/residence, they determine the current and estimated value in a balance with the current age of the applicants and come up with a amount or percentage they then offer, you then can live in the home until either you both pass away or have to move into either a retirement home, hospital or hospice.
Is this description sort of what you have been told?
My only concern would be sourcing the most reputable mortgage company or Bank in this field and having a good lawyer to read all the print in the contract. I think I would always be worried something would eventually go wrong with the deal or that one of us might need the money for a nursing home.
Have you thought of selling your home and finding somewhere to rent? I just think that by doing it this way you get the FULL value of your home instead of the reduced amount they offer. I do know of people that have done this and recommend doing so. Friends have said that downsizing to an apartment or small rental home (where you could garden) did not end up costing them that much more a month once they added up their property taxes and utilities. One friend said it cost her about $300 a month more to rent so she took a portion of the money from her sale and put it aside to cover that cost. She did not want to travel but she wanted some rural/forest land where she could leave a camper trailer. But if you are not ready to part with your home or opposed to renting this would not be for you.
I have never heard of this before but given the way that banks and mortgages companies screwed people in the States in the runup to 2008, I would be very wary. Paying a good lawyer to read the fine print might be a good investment.
Thanks good people. I'm seriously swaying in the "do not do" direction. A variety of reasons, many of them mentioned here along with my total disdain and wariness of financial institutions. And, most especially the precarious state that the country is in right now, who knows what will happen with the economy.
I'd rather will our home to the SPCA rather than some financial institution take it.
What had me seriously considering it is that 2 of the most business savvy persons that I know have repeatedly urged us to go in this direction.
My husband and I worked too hard to have this house and I don't want to go anywhere else. Actually, we are very fortunate to have it. If push comes to shove,we could indeed sell it. The property values in our neighborhood are quite high (as are the property taxes...).
We'll figure something out. Sacrifices will be made and it is stressful but so far we are not destitute...
I think putting your decision on hold makes sense in the light of what's going on in the US now. All the anti-people current policy decisions have me skeptical of any financial arrangement that would put my hard earned money in another's hands. Witness the creeping idea that medicaid recipients who in many cases are disabled face a work requirement.
As you said "I'd rather will our home to the SPCA rather than some financial institution take it." Right now, I think except for the very rich, the best policy is as close as one can get to cash in the mattress.