Q: Re your answer to a recent letter, I wondered if I could add a note of caution.

A family member took a reverse mortgage on their home to do home improvements. I don't think they were aware of how quickly the debt would grow, as you pointed out.

They believed their house would increase in value to compensate, but due to serious health issues they had to sell their large home on a slow market. Once the loan was repaid they did not have enough money to buy even a small place.

The good news was another family member was looking to buy a rental property and knew they would be ideal tenants. They pay a reasonable rental, and retain a nest egg from their sale.

A:

But still, they lost their home. Thanks for warning others.

Reverse mortgages can be tricky — particularly if you get one early in your retirement.

With one of these loans, you don't make any

Advertisement
Advertisement

Taxing rentals

Taxing rentals (2)

Loan fees

Accidental landlord