Reverse Mortgage

[GeneR]

Originally Posted by thequeen1

was considering a reverse mortgage as my house is paid for; but after reading some of these posts, my husband and I think we won't be going that route; we need a new roof and can't get financed for it even though the home is paid for. my credit rating ain't that good and the banks won't lend to me. I don't know what else to do.

As a former real estate broker who also originated mortgages for a couple years I will say you might want to do some independent investigation. Some of the claims made in these posts about the costs and dangers of a Reverse Mortgage are not accurate.

I've only originated one reverse mortgage and that was for an 80 year old man who was in serious need of money for living expenses. R.M.s are more expensive than common mortgage loans but the costs related here are being exaggerated.

I strongly urge you to do some more research outside this forum.

[anicon]

there are new rules in place regarding reverse mortgage closing costs. depending on the ltv of the loan, your fha reverse mortgage insurance premium will either cost you .5% of the home value or 2.5% of the home value. HUGE difference. also shop around and get multiple estimates. you can usually find a lender that will waive or lower their origination fee- especially if you play them against each other. the larger the loan balance the more leverage you have to negotiate closing costs. you can even shop around for your own third party closing providers (like title companies) to save a few bucks.

to the poster needing a new roof: in my humble opinion (for what it's worth)- if you have no other need for additional income and the sole reason for doing a reverse mtg is to finance a new roof- only do it if you have absolutely no other options. it's a very expensive way to go for something like that because of the closing costs and compound interest. perhaps a friend, family member or local agency could help finance a roof for you??

if you do decide this is your only option: when you take an fha loan like a reverse mortgage the roof needs to have at least 2 (could even be 3?) years of useful life remaining to get the loan. if the roof is leaking, needs immediate repair, has to be completely replaced, or doesn't have at least 2-3 years of life left- it would need to be repaired/replaced prior to closing the reverse mortgage. since you don't have the money to fix the roof you would need to find a roofer that would do all the work and invoice you. you would then be able to close on the loan and pay the bill.

[thequeen1]

Originally Posted by old_cold

They're certainly not the best answer for many...maybe even most... but are for some.
What is or are the reasons you have decided against it in your particular case?

we did the research and decided it was too risky for us. both of us are not well and we decided we had to take too many chances with closing costs and compound interest.

[Townandcountrygal]

For most of us, I believe they are a bad idea--too many risks (which sales reps usually do not mention) and when any sales reps gives me a *hard* sell and calls back again and again, it further reinforces my gut feeling the reverse mortgage is not as good as it sounds.