I am retired. wife and i need a new last car. house is paid in full. wife wants to do a reverse mortgage, in order to pay cash for the new car. i am totally against this. i need some opinions. yes or no?
by 
john pennington
ANSWERS: 11
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Taking out a mortgage on an already paid-in-full house is ill-advised, during this current depression we are experiencing. It's my belief that taking out another mortgage on a house should be reserved for some kind of "catastrophic" health issue (such as cancer) that either one of you may have befall you, in your "sunset years." In other words, keep the mortgage available as a kind of "safety net" for the two of you. +5
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A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live there. It can be paid to you all at once, as a regular monthly advance, or at times and in amounts that you choose. You pay the money back plus interest when you die, sell your home, or permanently move out of your home.
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A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live there. It can be paid to you all at once, as a regular monthly advance, or at times and in amounts that you choose. You pay the money back plus interest when you die, sell your home, or permanently move out of your home.
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I think you may have your terminology a bit mixed up. A 'reverse mortgage' is where the bank loans you money in monthly payments, gradually reducing the equity in your house. What you are probably thinking of is a home equity line of credit (HELOC), where the bank agrees to loan you a certain amount (say $30k), but you don't necessarily borrow it all at once. You can borrow $1k here, $3k there, $500 another time, etc. The advantage of using a HELOC to buy a car is that the interest on the HELOC is tax-deductible, whereas car loan interest is not. In your situation, I don't think it makes much sense to use a HELOC. My credit union is currently offering car loans at 4.65%. HELOCs are around 6%, so it ends up being a wash after the tax deduction. If you have the income to make a car payment, make a car payment. Leave the ownership interest in your house out of the transaction. That way if anything goes wrong, about the most the car loan company will do is repossess the car and ding your credit rating. If you default on a HELOC, they might come after your house. Good luck, I hope this helps, and enjoy your new car. . . .
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no.....
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One of the reasons the economic system got so bad is that people started to see their house as a bank instead of a place to live (as older generations used to).
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I still don't know how I feel about reverse mortgages. The whole practice seems ripe for abuse -- of the kind that won't be apparent until a whole bunch of people find themselves in crisis all at once, and THEN the press will blow the alarm, the regulators will say, "Oops. Your bad."
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Do you mean like an equity release scheme? where you sell off part of your house while you still live in it? or a re-mortgage where you borrow against the value of the house? To be honest, I would advise against either option. You are retired, so you have a fixed income which is unlikely to increase. If anything goes wrong with the re-mortgage, you could lose your home! Similarly, with equity release, if you sell off part of your home, the company who buy it could sell it on, and you could lose your home! You are in a fortunate position to have your home paid off - I can understand that you might be wary of paying high interest rates for a car - is it essential that you get the car right now? Can you afford to wait a year and save like mad for a new one? You are really in a buyers market for cars - as so few are selling, so you are in a position to negotiate a good price! Personally, I would not risk anything against the security of my home!
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Why not take out a loan and do a reverse mortgage? We have been considering this but want to wait until the housing market rises a bit more. My problem is that my wife's car is 11 years old and she refuses to part with it. It still runs fine and has less than 50,000 miles so there can be no real argument from my side. Just because you have a reverse mortgage, you don't have to spend all of the money. You can buy CD's and, if you aren't too old, an annuity. Good luck, let me know how it works out. +5
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I'm not a financial professional but I would not take out a reverse mortgage. Right now you can get almost 0% financing for a car.
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no to the reverse mortgage. what is wrong with your present car. You have time to find a good car for your needs. this is one of the best times to shop for a car. new or used.
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