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Old 06-24-2014, 06:34 PM
 
Location: Near a river
16,042 posts, read 18,991,724 times
Reputation: 15649

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Quote:
Originally Posted by FloridaHappy View Post
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.
Can you tell us what the fees are for your RM?
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Old 06-24-2014, 06:35 PM
 
Location: Near a river
16,042 posts, read 18,991,724 times
Reputation: 15649
Quote:
Originally Posted by NewToCA View Post
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.
Is the RM through a local bank, or through a national RM company, if I may ask.
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Old 06-24-2014, 06:46 PM
 
Location: Ocala, FL
407 posts, read 475,321 times
Reputation: 1299
Quote:
Originally Posted by newenglandgirl View Post
Can you tell us what the fees are for your RM?
There are no ongoing fees for the reverse mortgage. As I noted, we made a 45% down payment on the property when we bought it with the reverse mortgage in 2010. The interest rate is about 5% and is fixed. We do have to pay the taxes and insurance on the house every year.

All reverse mortgages are FHA. Not all banks will do them, you just have to call around.
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Old 06-24-2014, 09:50 PM
 
Location: Sacramento
13,784 posts, read 23,819,620 times
Reputation: 6195
Quote:
Originally Posted by newenglandgirl View Post
Is the RM through a local bank, or through a national RM company, if I may ask.
Large national company.
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Old 06-25-2014, 07:01 AM
 
Location: Southwestern, USA
15,431 posts, read 12,159,510 times
Reputation: 16645
Btw, good advice from a friend...never learn about a RM from
someone selling it to you...haha!
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Old 06-25-2014, 10:46 AM
 
Location: Prescott AZ
6,130 posts, read 9,093,524 times
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I recently read an article about RM and now am very leery of doing this.

Could You Finance Your Retirement With a Reverse Mortgage? - US News
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Old 06-25-2014, 01:04 PM
 
Location: Ocala, FL
407 posts, read 475,321 times
Reputation: 1299
Quote:
Originally Posted by PhxBarb View Post
I recently read an article about RM and now am very leery of doing this.

Could You Finance Your Retirement With a Reverse Mortgage? - US News
Nobody is making you go get a reverse mortgage. If you have the money to make monthly payments, go for it. Regardless of whether you have a reverse mortgage or a conventional one, you have to maintain insurance on the house and pay the taxes, along with normal upkeep. Even if you have no mortgage at all, you still have to pay the taxes and upkeep and a prudent person maintains insurance in case it burns or gets blown away in a tornado or hurricane. The taxes/insurance/upkeep is irrelevant to the mortgage itself as it's something you have to do no matter what.

I will say that if this house is not the last one you plan to live in, you might want to reconsider a reverse mortgage. As long as your home gains in value, you're fine, but if you want to sell down the road and move to another state or something, it eats into your remaining equity and you're probably not going to walk away with a whole lot of money in your pocket, just depending on how much original equity you've taken out.

As far as an inheritance, it occurred to me that to manage one's estate better, one could take out the equity and invest it in a trust fund or other investment that would pass without probate or taxation to the heirs. Then the estate wouldn't have to deal with selling the property and if one had to go to a nursing home, the money would already be there for their care. The estate would just pass on paying off the house and hand it to the bank if there was little or no equity left at the time of death.

The heirs to a property with a reverse mortgage have at least a year to decide what to do with it. It's not like the bank discovers you died and immediately forecloses on it. They can sell the house, refinance it, or just hand it to the bank, their choice, but they do have time to decide.

It's a good tool for the right person. FHA requires the borrower(s) to go through a course explaining the mortgage and its consequences and a certificate of completion is required before they will fund the mortgage. If the person conducting the course doesn't think you understand, he/she won't sign the certificate. You're not allowed to go into this totally blind. It's the law.
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Old 06-26-2014, 05:47 PM
PDD
 
Location: The Sand Hills of NC
8,774 posts, read 14,883,407 times
Reputation: 11886
We already had a reverse mortgage when I was unable to work and not eligible for SS insurance. It got us over the hump for a year or so until I was able to collect permanent disability. The upfront costs are pretty high but we had a lot of equity and we only used the RM for Mortgage and property taxes. When we sold we still had plenty of equity and now that we are retired and relocated to a cheaper part of the country we are doing pretty well.

If we ever run low on cash we will not hesitate to get another RM.

Our children are doing well on their own and we have no plans to leave them a lot of cash. I am doing my best to spend the money on us but if there is anything left over it's theirs.
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Old 06-27-2014, 05:01 AM
 
Location: in the miseries
3,302 posts, read 3,583,277 times
Reputation: 3810
As a part of our retirement strategy we are going to implement a reverse mortgage.
When we need the money.
No one we want to leave anything to anyway.

I think it's a good way to go.
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Old 06-27-2014, 07:20 AM
 
Location: Southwestern, USA
15,431 posts, read 12,159,510 times
Reputation: 16645
I'm thinking 62 is too young to do an RM.
If they give you $1000 a month...on $100k that's 100 months,
it could peter out in 8 years...
If they give you $500, then in 16 years.

Better to do an RM a 70 or later....remembering you won't
be getting what you would if sold outright, of course.

Does anyone have a way to calculate what you would get or lose, say, on a paid for
$150k house? $200k house? A $250k?
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