General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsDoes anyone have some experience or knowledge on Reverse Mortgages?
Are they good thing to pursue or are they a ripoff?
dipsydoodle
(42,239 posts)Assuming that to be the case then best avoided if the US is like the UK.
pacalo
(24,721 posts)Are reverse mortgages similar to UK's equity release?
http://www.equity-release-centre.co.uk/faq/qa-17--what-is-a-reverse-mortgage.htm
What are lifetime mortgages?
http://www.equity-release-centre.co.uk/faq/qa-17--what-is-a-reverse-mortgage.htm
Hope Auntie Bush finds these links helpful.
lamp_shade
(14,796 posts)dipsydoodle
(42,239 posts)Hassin Bin Sober
(26,273 posts)As a last ditch effort they are Ok if your kids aren't expecting to bank the proceeds from the house when you die.
At the very least, hold off taking a reverse mortgage as long as possible.
SoCalDem
(103,856 posts)IF you are quite elderly and are broke.
Otherwise, it's a way to extract YOUR equity, and pay a middle man "fees".. as your equity vanishes and you live on, I think they are forbidden from evicting you, BUT any family who might expect to "get thew house"..well, they are S-O-L
Response to Auntie Bush (Original post)
Ruby the Liberal This message was self-deleted by its author.
Auntie Bush
(17,528 posts)Ruby the Liberal
(26,217 posts)An HELOC (home equity line of credit) may be a better option - and those are out there for 1.99-3.24 interest for 12 months (then float, currently 3.99-ish). They are also tax deductible on the interest as opposed to regular consumer/auto-type loans. If you have the equity for a reverse mortgage, you have the equity for a HELOC.
What are you looking to accomplish?
Honestly, people asking your goals aren't fishing - they are looking to get you into the most appropriate financing vehicle.
I likely can't help you personally due to location, but happy to walk you through your options. I am a PM away if you want second eyes.
Auntie Bush
(17,528 posts)figure out if I should take out another mortgage (which would be very difficult to afford) or take out a Reverse Mortgage and not have to have so many worries. However, I have 4 children I'd always hoped to leave some inheritance to. Bummer! I would look into it thoroughly before I did anything. I was hoping someone here had some personal experience with RM. Thanks for your offer for advice. AB
Ruby the Liberal
(26,217 posts)You do a reverse mortgage and your kids could get hit with a bill as opposed to an inheritance. A home equity isn't a mortgage - Most (honest banks) don't even charge closing costs.
True Blue American
(17,972 posts)tularetom
(23,664 posts)So if you are contemplating doing this, best to sit down with your heirs and make sure they understand that your home won't be part of your estate.
Yo_Mama
(8,303 posts)The way a reverse mortgage works (and they are regulated), the amount you get it each month incurs interest. So instead of paying down your mortgage you are accumulating one.
When you sell or move out of the house (even to a nursing home), you are required to pay back the loan, which almost always requires selling the home. However only the amount accumulated from principal payments made to you plus interest on the accumulated interest payments is owed. The balance will be paid to the homeowner or the survivor or the estate, if the closure was due to death.
Taking them out early is a mistake, because say you take out a $500 monthly reverse mortgage when you are 65 and live to 85. You are paying interest on the first $500 payment for 20 years!
Also, the payment does not rise with inflation. In a traditional mortgage that generally works to the borrower's favor, because a fixed mortgage payment will generally decline as a percent of one's income. But for an elderly person who does this early, the initial payment may have been adequate, but 15 years later it will be much smaller in a "real" sense, so it does not make sense to do this.
wercal
(1,370 posts)....seriously, it does.
One thing to always remember - its not unlike a traditional mortgage, in the sense that you are obligated to pay taxes and insurance.
And, if you lapse on either of these, the mortgage company has the right to foreclose. And, there is absolutely nothing to slow the forclosure down...in fact its the reverse.
So read the fine print - figure out how quickly they can foreclose if you are late paying taxes, etc.
I would say 'have a fire sale' and get your own cash out of the house...but I assume you don't want to move, etc. Another option would be for children to buy it and rent it to you - their incentive being that your other alternative does not involve their ever owning the house.
Now one thing others on this thread aren't considering is nursing homes. If I recall correctly, if you go into a nursing home with no money, medicaid will pay for it...but require you to liquidate all your assets. So, your heirs may still not get the house, even if you don't do the reverse mortgage. So this decision depends on your own health and projected longevity...likelyhood of nursing home care...and heirs.
SoCalDem
(103,856 posts)bank the 200K, and even withdrawing $1111.11 per month in principal will last 15 years..
Perhaps selling is better
You would have to actually move though.
True Blue American
(17,972 posts)2.5 times 200,000. $5000. But, of course you have to live somewhere. Many are hurting for every day living expenses and these billionaires are peddling fear.
Now, why does that sound so familiar? Fear of those who do not look like you? Greed, selfishness.
dionysus
(26,467 posts)Auntie Bush
(17,528 posts)it was a scam. I was hoping someone who had some personal experience with one would know the truth and get to the fine print. I'm having trouble believing those who are selling them or profiting from them...it's a scary thing to do or ever contemplate.
Raven
(13,872 posts)a big point of the reverse mortgages being insured by the federal government. Shameless shitheads! Oh, and Fred tells us that if we take one out we can live the retirement we have dreamed... this, after he and his ilk robbed our retirement accounts. Reverse mortgages, with very few exceptions, are a very, very bad idea.
True Blue American
(17,972 posts)Man with that kind of money.
Tech
(1,766 posts)True Blue American
(17,972 posts)Every time I see Tom look into the camera and tell the Elderly how great a Reverse mortgage is.
Yo_Mama
(8,303 posts)If you are quite elderly and own your own home and need the money, then it may be the best way for you.
But taking one out too early is a big mistake.
Here's some HUD info on them.
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten
I'm going to repeat, doing this early is a big, big mistake.
True Blue American
(17,972 posts)Any time in a great many cases thanks to crooked lenders, etc.
The lies that have been peddled about living in your home for the rest of your life are just not true if you miss a payment, neglect to pay your taxes or lenders selling your mortgage to someone else.
Reading how Reverse Mortgage foreclosures are soaring makes me angry.
Walk away
(9,494 posts)and desperately trying to make it to Social Security and Medicare. Without the reverse mortgage she would have had to move out of her home. She did her research and understands what she has gotten into. She even lobbied to have her condo association change it's contract in order for all 1000 units to be eligible for RMs.
She was never going to be able to pay off what is left of her mortgage and she has no one to leave her property to and could not make the monthly payments. It's not for me but talk to your family lawyer or accountant. If you don't have one get a trusted recommendation.
Warren DeMontague
(80,708 posts)i.e. structured to be a bit of a ripoff.
Auntie Bush
(17,528 posts)I was hoping someone here had experience with this type of mortgage.
Response to Auntie Bush (Original post)
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hrmjustin
(71,265 posts)Response to Auntie Bush (Original post)
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True Blue American
(17,972 posts)I just read today that reverse mortgage foreclosures are soaring. Elderly losing their homes because of crooked dealings, selling mortgages to others.
Miss one payment and they can foreclose. I have always been against them, now the truth is coming out. Makes me sick.
https://reversemortgagedaily.com/2019/06/12/usa-today-investigates-reverse-mortgage-foreclosures-evictions/