Anyone With A Reverse Mortgage? (Surprise: real estate, house, lease)

[BiggsHomes]

The reason that there is SOOOO much paperwork is that people keep sueing when they run into trouble. Very few people are willing to take personal responsibility for their actions, so they sue somebody else. The find a slick lawyer who finds a loophole in the documentation. When that happens, the bank (or whoever) adds to the paperwork to cover the loophole. The process cycles, and the contracts get longer and longer every year.

Here's an example of how rediculous this is: In Arizona, a couple bought a house with no pool. They later added a pool and did not put a fence around it. Their child fell into the pool and drowned. They then sued the real estate agent, because the agent did not inform them that they needed to put a fence up if they added a pool. As a result of that court case, the Arizona residential purchase contract now has a paragraph about pools and every buyer has to initial it, regardless of whether there is a pool on the property.

If you are getting a loan on a house. Make absolutely sure that you understand every aspect of it. Have the lender explain it in detail - long before you get to the signing at the title company. The title company is just having you sign the lender's documentation. The lender should explain the loan to you, not the title officer.

Chionactis got a scary loan. That loan is a pay-option loan where the lender allows you to pay less than the interest that is due. The amount of interest that you do not pay each month gets added to the amount that you owe. For example, if you got a 100% loan on a $300K house at 7% interest and you CHOOSE to pay the minimum amount, of lets say $750. Then you now OWE $301K. The next month's payment now grows, because you have now borrowed $301K instead of $300K. DO NOT EVER GET THIS LOAN unless you know what you are doing and are 100% sure that you will pay off the loan QUICKLY. Also, be SURE that there are not fees to pay off the loan early.

Well, that's my two cents.

[Tfreesemann]

With a reverse mortgage you get a copy of all the documents you sign and you also have to go through Free Reverse Mortgage Counseling done by a third party. If I can't read the papers, I won't sign. Find someone who encourages you to read the documents.

[nitram]

This is a good website to explain reverse mortgages and other mortgages as well:
Reverse Mortgages in Arizona

[MotleyCrew]

I am curious as to what would happen to a homeowner that did sign up for a reverse mortgage and have the market drop. Does the mortgage company come after the homeowner for the difference?

[HDavis]

If I know that my client is a "reader" I give them everything a few days before so they can read it and come to the settlement table with their questions. If you want to read all of the documentation, just ask your Lender to provide it to you prior to closing. Unless there are major changes or the closing has a very tight turn around time, there's no reason this can't be provided.

NOTE: Brokers generally cannot do this because they do not typically generate the closing paperwork but a Lender can.

[ecloebl]

Originally Posted by azloafer

Anyone who has closed on their mortgage at a title company knows that you are signing papers for 30 minutes, non-stop. I would love to take those papers home and study them before signing, but I don't know of any title company that will allow that. They give you a sentence explaining each paper as you sign. There should be a better way!

A friend of mine closed at Wells Fargo. They told her that the interest rate was locked in just as she had wanted. Five years later she was notified that it was only locked in for five years! What a system!

Have the papers faxed to your attorney and do not sign anything until he/she approves it. You are buying a home for hundreds of thousands of dollars. A couple hundred dollars paid to an attorney is money well spent.

[azloafer]

Originally Posted by ecloebl

Have the papers faxed to your attorney and do not sign anything until he/she approves it. You are buying a home for hundreds of thousands of dollars. A couple hundred dollars paid to an attorney is money well spent.

A neighbor here in Green Valley had the same thing happen to them at Wells Fargo. WF told them that the rate was locked in... 5 years later...WHAM!

[sierraAZ]

Originally Posted by MotleyCrew

My husband drove them nuts reading each word.

That's what I do as well and plan to continue doing! I may not literally read everything (I'm good at skimming), but if something raises red flags... it better be explained or I'm not signing!

[Stephan_K]

Originally Posted by MotleyCrew

I am curious as to what would happen to a homeowner that did sign up for a reverse mortgage and have the market drop. Does the mortgage company come after the homeowner for the difference?

Did you check out the link on reverse mortgages in AZ that nitram provided? From the calculator that determines approximately what a bank will loan, they only loan 1/3 to 1/2 the value of the home. I don't think the market would ever, let alone could ever, drop 50% - 66% in the time frame that you would be turning the house over to the bank. What a deal for the bank!

[SOON2BNSURPRISE]

I just never liked the idea of the reverse mortgage. It has its place in the world I guess. Seems that for people that haven't saved and invested the amount that they need to retire than the program may work for them. I guess that my wife and I just don't ever want to be in that position to need to use that kind of "retirement instrument". I also read everything that they send me. My lender sent a nice little book that we ended up signing. That was some good reading, and this is only to get the preapproval for our loan when we finally get the home someday. I just don't understand how someone can sign a document and never have read it or didn't get legal counsel on if they are unable to read through the mumble and jumble of the document. One poster sudgested hiring legal counsel, and I think that is a great idea. That has to cost less than the alternative. Something that you may consider is that if one party places a condition within a legal document, you also have the right to install a condition of your own. The other party can accept or reject the condition that you have added. The biggest mortgage issue that the nation is facing is with the percieved need to have a home at any cost. I think that there were many that figured they were loosing out on instant wealth. The market had been so good for so long that many thought it would never end. Now the chickens have come to roost and the party is over. Those great mortgages that all those people have signed on for are falling apart. I think that were many that didn't read the documents, didn't understand them, and didn't care what the document said as long as they could get a home. Now there are some that are in such a financial fix that they are getting reverse mortgages to maintain there lifestyles. Go figure.