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Ruby Said:

With declining housing market conditions, is it a good time for my mother-in-law to get a reverse mortgage?

We Answered:

First of all, i would like to correct another answer by saying that the home with a reverse mortgage on it will remain part of your Mother's estate. At the time of her passing or if she sells the home, the reverse mortgage lender simply wants the loan paid off. For example, if your mother passes and her RM balance is $100,000 and the house sells for $150,000, the lender would receive their $100,000 payoff and the other $50,000 would go to the estate. This is exactly the same as with any other mortgage.

To answer your main question, if your mother needs the money she should not worry about value as long as she has enough equity to make the RM work. If she can wait for the market to rebound, she would be eligible to receive more money. Also, the expected interest rate on a RM is 5.53 this week. The floor is 5.50 so it cant get much better.

The general rule of thumb for a reverse mortgage is the more the house is worth, the lower the rate, and the older the borrower is the borrower can borrow a higher percentage of value