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What Will Happen With A Reverse Mortgage?

August 8, 2011 by  

Dear Bob,

I have a reverse mortgage. What will happen with these if everything falls apart?

Thanks,

Sandra

Dear Sandra,

It depends on what you mean by falls apart. But let’s look at a likely scenario: hyperinflation. If hyperinflation occurs, the value of the dollar plunges. It begins to take so many dollars to do everyday things that the government compensates by printing new money with additional zeros. Ones become tens, tens become hundreds, hundreds become thousands, etc. If you have a mortgage, this works in your favor. Where you once were paid $1,000 per week, for example, you are now paid $10,000 per week. That $10,000 will still purchase the same amount of goods that the $1,000 bought, so you aren’t really being paid more, it just seems that way. Let’s say the mortgage on your house is $1,000 per month. It currently takes approximately one-fourth of your monthly pay to cover your mortgage payment. In a hyperinflation scenario, you are now receiving a paycheck of $10,000 per week. Your mortgage will remain at $1,000 per month, so now it takes only one-tenth of your weekly salary to pay your mortgage. If you have fixed-rate debt, hyperinflation will help you. (That’s why the government likes inflation.)

However, in a reverse mortgage, the payment you receive from the lender is a fixed amount. Unless the lender chooses to tie your payment to inflation — or that is written into your contract already — you will continue to receive that fixed amount. So if you currently receive $500 per month in your reverse mortgage, you will continue to receive that $500. However, that income will not keep up with inflation. I hope this helps.

Best wishes,

Bob

 

Bob Livingston

is an ultra-conservative American who has been writing a newsletter since 1969. Bob has devoted much of his life to research and the quest for truth on a variety of subjects. Bob specializes in health issues such as nutritional supplements and alternatives to drugs, as well as issues of privacy (both personal and financial), asset protection and the preservation of freedom.

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  • tony rinna

    I read your article on CAPPS law can I get money out of my term life ins. policy?

  • Former Walmart person

    This ignores the possiblity of martial law and mass internment in FEMA camps as starving folks have to pillage and murder for their daily bread because buying that daily bread costs $325235 to do legitamitely.

  • WENDL ORMSBY

    In your responce about reverse mortgages, you didn’t mention anything about the question that I have: What if I don’t recieve any payout from my R.M. ? Will it still cover the mortgage payment despite inflation?

  • http://n/a threefiftyseven

    Wendl,
    You are not supposed to have a mortgage payment. You were to have a choice of payments to you or lump sum payment. I have one and it was lump sum. The beauty of the plan was to live forever in your house and just pay taxes and bills as usual. The cash you received I hope you put into gold or silver bullion coins and something to eat. That house is yours until you kick off. I never plan on ever paying to get it back because it will be worthless on a Reverse mortgage payback basis. The house now appraises at 40% of my cashout. A classic LESS IS MORE.

  • anne-ology

    One thing anyone needs to consider before signing up for a reverse mortgage – who benefits?; the answer is simple – the banking industry.
    Therefore, what you’re doing by signing up for this is to place yourself in debt to this institution; ok, maybe your contract states for life – what happens upon your death?; your spouse’s death?; what about the financial burden to your beneficiaries?
    Looking to where the money is, will locate the problem with the system – look at these lawyers in DC who are ignoring the will of the people because they no longer consider themselves servants of the people.

  • http://watercure2.org Bob Butts

    Instead of looking at all the symptoms of bad ethics, common sense ells us to all we can humanly to create more ethical thinking. If we were truly ethical we would not even think of taking advantage of each other. look at what the extremely ethical water cure has done for the health of the world at no cost in terms of curing so-called incurable problems just by correcting the dehydration tht causes bad health.

    Our nation and the world values money more than people. ethical people would never do that.

    God bless us all.

  • jibbs

    A reverse mortgage is a bad idea. I thought about it, but NO THANKS. I’d rather sell it(if you can) and take my money NOW.

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