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Old 06-24-2014, 10:43 AM
 
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A heloc usually has adjustable rates . that would be insane for a senior.
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Old 06-24-2014, 11:47 AM
 
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I was knocking myself out to pay down my house (although knew I'd still have a mortgage at 65 and thought I'd get a reverse later in life. Re-decided, that I'd refinance my house so that I'd have a much lower mortgage for the next 30 years and not need to get a reverse, considering the fees. I can always muscle up and pay down the lower mortgage if that works better, but right now I have $1k less a month, plus can manage the payment if I am on my pension and Soc. Security, being 4-5 years away from those.

I have read that reverses can have high fees, otherwise, it seems like a good idea off the cuff for many people.
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Old 06-24-2014, 11:52 AM
 
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With a reverse on a paid-for house, if the senior wants to move into assisted living or something, can she sell the house for the remaining equity? Is it like having a loan out on the property? I'm thinking of a relative here, sitting on equity and likely needing more income to stay in the house, maybe moving to assisted living in the next few years. She's 88 with small pension and Soc. Security and savings that she doesn't want to touch (grr) and about $165k in paid-for house.
So what happens if the senior wants to sell the house and has collected some amount of a reverse mortgage?
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Old 06-24-2014, 12:02 PM
 
Location: Southwestern, USA
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I'm glad I started this thread now!
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Old 06-24-2014, 12:55 PM
 
Location: Ocala, FL
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We have the reverse as mentioned above. Current balance is in the 170s, my house is worth about $325K. If I sell it tomorrow, I pay off the mortgage and pocket the rest, just like if it was regular-with-payments mortgage and I sold the house. No difference. It's still my house. I have the deed. The bank doesn't have their name on my title. They have a mortgage, just like if you bought a house with a regular mortgage you have to pay on each month. I just don't have to make payments.

When I die, the house goes into my estate and is sold by my executor. Anything over and above the amount of the mortgage at that time goes into the estate to be divided up between my heirs, which in my case is charities.

They recently made a new rule (thank you, AARP!) that if a spouse is not on the mortgage, they have the right to purchase the home at 95% of the current appraised value...not 95% of the outstanding money, but the appraised value, so if the house is underwater at the time of the owner's death, the spouse can presumably go get his/her own mortgage for 95% of the appraised value and pay off the bank, regardless of the balance owed on the reverse mortgage at the time of the spouse's death.

If the widow above has a $165,000 house, she can take out roughly $105,000 in a lump sum or get monthly payments of $1000 or more until she dies, then her heirs have the first option to buy out the mortgage. If they don't want it, then the bank takes it and sells it. If the house is worth less than what she owes on it, the bank takes the loss. They can't come back on her estate and demand repayment.

Again, the owner of the house remains the owner of the house. They're still obligated to make repairs, maintain insurance, and pay the taxes due each year.

Why, oh, why, pray tell, would somebody sell a paid-for house and then go rent somewhere? You have to pay the rent or get evicted. The landlord is always up your butt. The neighbors may not be people you want to live next door to. The object is not to have a monthly housing expense!
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Old 06-24-2014, 04:13 PM
 
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the biggest danger of reverse mortgages is the fact you may no longer be able to stay in your home because there may not be public transportation if you can't drive anymore or need special medical facilities or care .

nothing worse then having no equity left and no money and having to move. many folks take reverse mortgages just because they are low on funds.

Last edited by mathjak107; 06-24-2014 at 04:51 PM..
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Old 06-24-2014, 04:40 PM
 
Location: Southwestern, USA
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Is 62 too young?
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Old 06-24-2014, 05:28 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by Miss Hepburn View Post
Is 62 too young?
very likely age 62 will be too young for effective payments you desire (to sustain you)

Get a quotation (they are free and many banks happy to jump right on your Request for a Reverse)
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Old 06-24-2014, 05:49 PM
 
Location: Sacramento
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Quote:
Originally Posted by newenglandgirl View Post
Do you know how that works, specifically for her? She owns the deed, right? And fees?
Don't know about the deed, I know she stays in the house and has no restrictions about what she can do in the home (doesn't need approval for decorating or changes).

No fees at all, she receives a small monthly check and I'd assume all fees established at the time of the reverse mortgage were calculated in establishing her monthly payment.
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Old 06-24-2014, 05:52 PM
 
Location: Sacramento
13,784 posts, read 23,811,113 times
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Quote:
Originally Posted by mathjak107 View Post
the biggest danger of reverse mortgages is the fact you may no longer be able to stay in your home because there may not be public transportation if you can't drive anymore or need special medical facilities or care .

nothing worse then having no equity left and no money and having to move. many folks take reverse mortgages just because they are low on funds.
I can understand the concern here, but in our case this involves a condo in a major metro area with lots of public transportation and also supplemental senior personal transportation as needed.
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