Reverse Mortgage

[Iolanthe15]

I have the idea that the only person who should get a reverse Mortgage is someone with no one to leave anything to and feels comfortable with the idea of remaining in the house whatever happens . Am I wrong here ?

[A HERETIC I AM]

1. Not necessarily.

A Reverse Mortgage is basically a loan that doesn't have to be paid back - the bank would just keep the house.

The fact is however that once the lendee passes away or vacates the building, there is a period of time where the loan can be satisfied and ownership can be retained by the heirs by securing another mortgage.

It is an effective way for someone who needs an income stream in their later years to turn their home into one, with no worries that they will have to make monthly payments.

We may have to consider doing this very thing for my mother (she is in her 80's). She has income and is doing OK financially, but there could come a time when her income is no longer sufficient. A reverse mortgage will be the only option left and it would work just fine. If either myself or one of my siblings wanted her home then it wold be up to that person to secure a regular mortgage to satisfy the reverse.

[DrDan]

2. what can one typically expect from one of these? 80% of the value?

[A HERETIC I AM]

3. Using the linked calculator and my mom's info, it appeared to be about 70%

I entered her birthdate, (She's 82) the value of the home at $200,000 and the value of the remaining mortgage at 0 and it gave a loan value of just under $142K.

http://www.accessreversemortgage.com

I found that by searching "Reverse Mortgage" and that page was the 3rd result from the top. It is a Florida based website, so other lenders in other states may give a different amount.


Edited because the first link was no good.

[DrDan]

4. thanks for the link. I am surprised that the bank just takes over the house

rather than the loan becoming an estate liability - one to be repaid with estate assets.

I guess they (the bankers) see quite a profit from the future sale of the homes.

[Paper Roses]

5. As one with a Reverse Mortgage, may I chime in here?

When my late husband and I decided upon a reverse mortgage, they were being hyped all over TV as the best thing since sliced bread.

We needed some work done on our house and did not have sufficient funds.

The house was paid for and assessed at about $400,000. We took out the RM with the most horrible amount of paperwork and great expense. That was 6 years ago. Think on this. It cost almost $10,000 to do the loan itself. We paid a few bills, and did the residing on the house. That all came to about $42,000. The loan against the property is now $65,000. All interest since that initial use.

My husband has since died and I live in fear that somehow when I go, things may get pretty convoluted for my kids. I cannot seem to get an answer from the mortgage holder about what happens when I go. Supposedly my heirs have to sell the property within 6 months. What are they supposed to do when probate takes, as in my husbands simple estate, 2 years? What happens now that NO real estate in my town is selling.

I will again try to contact the lender and see what they can tell me what the situation is upon payoff so that my kids know what to do.

I would never do this again. Should never have done it in the first place.

If someone is alone, with no heirs to whom they would like to leave the house, it would be a consideration.

I would also do it with a local bank and not a finance company. I am told that things have changed in the last few years. I hope so for those who may be considering a RM.
There is no way for me to get out of this and seems to be no way to find out what my kids have to do when I'm gone.

[CountAllVotes]

6. someone I know should have done this

Too bad she did not do it is all I can say. She has a son and he hates her. She got sick and she is now in a nursing home. She wants to go home but cannot. That is because her son is trying to sell her house out from under her as he has Power of Attorney.

I'd say the bottom line is that is you are on your own and no one gives a darn about you and you are living on little then this is a fine option indeed! :D

[2Design]

7. more bank mafia scamming like high interest credit cards and loans against your house

This would be a no no to me
Refinance the house take the money out and pay payment that will never be paid off instead