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Reverse mortgage: What’s the catch?

May 12, 2015

I am retired. I just woke up to face another glorious Monday. I usually turn on the TV from bed because the nonsense on the tube wakes me up faster when I watch the follies of men. This time there was the usual wars where people die because they don’t know how to organize formidable forces, but wait a minute here is a doozy,  a “reverse mortgage” commercial by a famous ex-US senator. Impressive. I am trying to sound cynical. I had to comment on that one because as an immigrant many years ago I have been caught many times by the so-called “attractive but never-delivering commercials.”  The day I stopped listening to most commercials I started making real money. The “catch” is that reverse mortgage works for the “fee makers” more than for the “home makers.” If you knew that why did you get a reverse mortgage?

The answer: The difference is in perception. Is your home is a progressive money-making business or a regressive source of income? That depends on age and attitude. If you are too old you rather pay others to do what you can do better? I understand that. You know others are more interested in their own income than yours but pretend the opposite. Now, if you are lazy or stupid not to do the “business” yourself that’s the “catch,” otherwise a home is really a bonanza, a gold mine for a smart dude. I borrowed the max they would lend me at the lowest interest they could offer and the highest amortization (there are great deals out there). I put the money to work for me at 25% and had enough to live on in luxury and easily pay the increased monthly mortgage payments (my stupid best friend paid off the Hugh mortgage from inheritance). As I said, a home with a large equity is a gold mine. Sure, if you have a “mutual funds” personality like my friend has then go for reverse mortgage. It fits your attitude. But, if you enjoy running your own financial affairs without fear of loss go for a max loan on your house, but wait, don’t do it if you don’t know how to split the “gelt” in a half. The reverse mortgage catch is: consider doing it only if you don’t know how to live and invest!

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