U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 09-15-2014, 01:18 PM
 
Location: Ocala, FL
407 posts, read 474,962 times
Reputation: 1299

Advertisements

Quote:
Originally Posted by newenglandgirl View Post
So basically with either a regular RM or a RM for purchase you are borrowing against your house. That would work well if you live in it till you die, and hopefully then the home would have gained value, not lost it. If it lost value (if the area went downhill or the market bust), then heirs would have to pay off quite a bit of money. Do I get that right?
Quote:
Originally Posted by newenglandgirl View Post
One more question....

Could one purchase a retirement home that will be the primary residence with an RM before moving into it (i.e, that is while living in the current home while it's on the market)? Would the intention to live in the new house permanently qualify?
You're borrowing against the house, yes. Your heirs would only owe money on the house if they wanted to keep it. If it's not worth what the balance of the mortgage is, the bank takes it, sells it, and writes off the balance. Your estate/heir is not liable for any balance after the house is sold. It's a completely separate transaction from your estate.

I believe you have to move into the retirement home at the time you buy it with the reverse mortgage. Why would you stay in a home you're trying to sell? A house sells better and faster empty. There's no limit on the number of homes you can own, but you have to live in the one with the reverse mortgage on it. We own two rental properties in addition to our RM house.
Reply With Quote Quick reply to this message

 
Old 09-15-2014, 04:26 PM
 
Location: Sacramento
13,784 posts, read 23,813,363 times
Reputation: 6195
I heard an interesting story today I hadn't previously heard concerning using reverse mortgages.

An older couple bought a home and put 20% down, and bought the maximum amount (dollar wise) of home they could afford. A year or so after moving in they applied for the reverse mortgage. They didn't expect to get much back per month, or in a lump sum, but did it primarily to stop the mortgage payments.

This allows them to use the money they were spending on the home loan on their lifestyle, yet stay in the house they could barely afford.
Reply With Quote Quick reply to this message
 
Old 09-15-2014, 05:15 PM
 
1,227 posts, read 1,260,773 times
Reputation: 4310
This is an interesting explanation. Be sure to look at pg 16.

http://crr.bc.edu/wp-content/uploads...al_med-res.pdf
Reply With Quote Quick reply to this message
 
Old 09-15-2014, 05:32 PM
 
29,782 posts, read 34,876,173 times
Reputation: 11705
Quote:
Originally Posted by NewToCA View Post
I heard an interesting story today I hadn't previously heard concerning using reverse mortgages.

An older couple bought a home and put 20% down, and bought the maximum amount (dollar wise) of home they could afford. A year or so after moving in they applied for the reverse mortgage. They didn't expect to get much back per month, or in a lump sum, but did it primarily to stop the mortgage payments.

This allows them to use the money they were spending on the home loan on their lifestyle, yet stay in the house they could barely afford.
Yup, creativity
Reply With Quote Quick reply to this message
 
Old 09-15-2014, 08:55 PM
 
Location: Chesapeake Bay
6,048 posts, read 3,873,624 times
Reputation: 3502
Quote:
Originally Posted by NewToCA View Post
I heard an interesting story today I hadn't previously heard concerning using reverse mortgages.

An older couple bought a home and put 20% down, and bought the maximum amount (dollar wise) of home they could afford. A year or so after moving in they applied for the reverse mortgage. They didn't expect to get much back per month, or in a lump sum, but did it primarily to stop the mortgage payments.

This allows them to use the money they were spending on the home loan on their lifestyle, yet stay in the house they could barely afford.
This is the best retirement strategy I've read in years.
Reply With Quote Quick reply to this message
 
Old 09-15-2014, 09:44 PM
 
Location: Sacramento
13,784 posts, read 23,813,363 times
Reputation: 6195
Quote:
Originally Posted by Weichert View Post
This is the best retirement strategy I've read in years.
Yeah, it certainly seemed pretty clever to me. It allows the couple to live in a "plus-plus" house the rest of their lives and also provides them plenty of spending money on a daily basis (not making the huge mortgage payment).
Reply With Quote Quick reply to this message
 
Old 09-16-2014, 04:17 AM
 
Location: Near a river
16,042 posts, read 18,982,141 times
Reputation: 15649
Quote:
Originally Posted by NewToCA View Post
I heard an interesting story today I hadn't previously heard concerning using reverse mortgages.

An older couple bought a home and put 20% down, and bought the maximum amount (dollar wise) of home they could afford. A year or so after moving in they applied for the reverse mortgage. They didn't expect to get much back per month, or in a lump sum, but did it primarily to stop the mortgage payments.

This allows them to use the money they were spending on the home loan on their lifestyle, yet stay in the house they could barely afford.
That plan would depend on the sure-fire reliability of getting an RM. What are the criteria a lender looks for? I would imagine a high-demand area would be one of them. I'd like to know the reasons an RM would be turned down, putting that kind of plan at risk.
Reply With Quote Quick reply to this message
 
Old 09-16-2014, 04:33 AM
 
Location: Near a river
16,042 posts, read 18,982,141 times
Reputation: 15649
Quote:
Originally Posted by LookingatFL View Post
This is an interesting explanation. Be sure to look at pg 16.

http://crr.bc.edu/wp-content/uploads...al_med-res.pdf
This is a great guide, reps to you for posting it. The comparison makes me lean back toward my original plan, to downsize to a smaller less expensive home in a less expensive area, instead of an RM. No small feat though.
Reply With Quote Quick reply to this message
 
Old 09-16-2014, 03:31 PM
 
Location: Hiding from Antifa?
6,420 posts, read 4,181,378 times
Reputation: 5715
Quote:
Originally Posted by Petunia 100 View Post
You can't borrow every last nickel, the lender wants some equity to (hopefully) cover accrued interest and market fluctuations. If you put down 50% and take a traditional mortgage, there may not be much of anything to borrow later. Higher LTV are allowed as you get older, and your house may appreciate in the meantime, so there may be some room for additional borrowing.

I'm not worrying overly much about my heirs. I'm going to cover my own needs first. If I die before spending it all, they can have what is left. I have given them a good start, it is up to them to make their own way and take care of their own finances. Besides, they will (hopefully) be well into middle-age before I kick off. They should be set by then.

I watch my own mother, aged 82, still fretting about adding to her savings and doing without things she would like because they are "too expensive". For example, she has been wanting new dual-pane windows on the west side of her house for oh, about 20 years now, but will not pull the trigger because of the cost. It's absurd; she should enjoy what she has worked so hard to accumulate. That will not be me.
Your mother grew up during the latter days of the depression. That shaped a lot of people into being misers. Don't hold that against people like that. They can't help it.
Reply With Quote Quick reply to this message
 
Old 09-16-2014, 03:38 PM
 
Location: Hiding from Antifa?
6,420 posts, read 4,181,378 times
Reputation: 5715
Quote:
Originally Posted by NewToCA View Post
I heard an interesting story today I hadn't previously heard concerning using reverse mortgages.

An older couple bought a home and put 20% down, and bought the maximum amount (dollar wise) of home they could afford. A year or so after moving in they applied for the reverse mortgage. They didn't expect to get much back per month, or in a lump sum, but did it primarily to stop the mortgage payments.

This allows them to use the money they were spending on the home loan on their lifestyle, yet stay in the house they could barely afford.
That's my plan if I would ever win the HGTV Dream Home. Get a mortgage to cover the taxes, move in and as soon as possible get a reverse mortgage that would pay me enough to cover RE Taxes, utility bills, and maintenance. Figure the income tax hit would be under 40%, so the equity would be about 60%. The house is usually worth about 2 million, so that should be a pretty good "income" from the RM.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top