Equity Tap or Reverse Mortgage??

What makes the most sense, a reverse mortgage or a line of equity? In the last few months I have tackled this question twice. There are a number of different things to consider when evaluating the two choices.

In the first instance, the choice was pretty cut and dry. The home, a cute little two bedroom that sits just above downtown Santa Cruz, was owned outright. No mortgage and very well maintained. The widower wanted some "mad" money in order to do and buy what had been denied him during his marriage. The upside of the reverse mortgage was that there would be no monthly payments, the checks would arrive monthly and upon his death the reverse mortgage would be paid off by his heirs and any proceeds would become part of the trust. While the reverse mortgage is costly, there are no other considerations.

The second situation is quite a bit more complicated, a recent widow living in a home that is burdened with two mortgages, in need of TLC and has no cash flow outside of social security. There is no choice but a reverse mortgage, one of which is going to require costly roof repairs before the reverse mortgage is even in the bank. It is a less than ideal situation no matter how you look at it.

Needless to say, I have my fingers crossed that I never find myself stuck, with no alternative way to make ends meet. It is nice to know that there are ways to use what is yours to keep it together, or to buy that big screen flat T.V. you have wanted for years.

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