My uncle is considering this option and I'm kind of researching it a bit, as he wanted my and my mom's opinion. It seems like it might be a good plan for him and his situation.
He's 72 and retired and owns a home (not sure of it's value but my guess is around $250-300k). He is not married, nor does he have any children. In essence, no one he feels he needs to leave an inheritance to when he dies. He worked until about 2 years ago and is currently living on social security and a small retirement nestegg.
What are your opinions and do any of you (or your parents) have any experience with this type of loan? It seems like he might as well tap into the equity he has built up the last 20 years or so (when he bought the house) while he is alive and can use and enjoy the money. My mom is his next closest relative and she certainly doesn't need the inheritance when he dies. I really don't see any pitfalls that I can find to him doing this kind of loan. He can live there until he dies or needs to go into assisted living. At which point, the house would be sold and the reverse mortgage loan paid off. If there was any equity left over, that would go to his estate. If for some reason his home value is less than owed, his estate is not liable for it.
Just wondering if there are any cons to this, that I haven't thought of or realized in my researching.