So I did my friend Mrs N taxes and peeked at her mom's financials. Mostly because she hasn't been filing and I just wanted to confirm it was okay to not file. Nana was fine not filing.

But in the process of looking over all her documents I told her that she now owed $65k on her condo. She freaked out and said what, why, how?

Well in 2010 she owed $14k on her condo but she was tired of paying the monthly note. She was convinced by her ex-SIL to get a reverse mortgage in the amount of $47k. Her note was paid off and she got $23k in cash, and $8k in fees. She was told that she could live in the house till the end of her life and then Mrs N would have to sell it and pay it off. All true but I guess it wasn't explained that like a Credit Card the $47k would continue to accrue interest and fees every month and the amount owed would balloon.

It also could occur that she would reach the maximum limit to be borrowed from the reverse mortgage, in her case $150k and then be forced to refinance or sell the condo. She sat there stunned. For 8 years she actually believed she could live in her house rent/payment free and never be kicked out. It was soul crushing to see the realization kick in.

I suggested that she consolidate the reverse mortgage and get a regular mortgage now before rates keep on going up. Mrs N just got her divorced finalized yesterday so they have a rough idea of budgeting and finances.

Had I realized they were paying $1k/year in fees and $3k/year in interest on the reverse mortgage I would have suggested a year ago they consolidate while rates were lower.

She also owes an assessment on her condo but she has no idea how much. And a car loan of $10k just started in January 2018 at 5%. That being said if they consolidate all their debt, I'm including Mrs N, to the tune of $120k the payments will be around $600/month. Arrgh because they should have refinanced last year and been saving the money. And the rates are so much higher now about 1%.

I don't know what to say because I don't know if Reverse mortgages are good. I feel like maybe people should sell the house and live in it. But they get the appreciation of staying put and paying interest and fees. I guess it's a risk.