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Old 04-12-2015, 03:53 PM
 
29,779 posts, read 34,863,854 times
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Window is rapidly closing to get hassle-free reverse mortgage - The Washington Post

Interested in a reverse mortgage without a lot of hassles? Better get your application in fast. As of April 27, the federal government is imposing a series of extensive “financial assessment” tests that will make applying for a reverse mortgage tougher — much like applying for a standard home mortgage.


FYI if appropriate.
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Old 04-12-2015, 04:27 PM
 
Location: Prescott AZ
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Great read Tuborg. Thank you. I wish the Fed would address the big fees associated with a RM which certainly limits the amount of money one can get out of the house.
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Old 04-12-2015, 08:44 PM
 
29,779 posts, read 34,863,854 times
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Quote:
Originally Posted by PhxBarb View Post
Great read Tuborg. Thank you. I wish the Fed would address the big fees associated with a RM which certainly limits the amount of money one can get out of the house.
I found it fascinating that with the new rules some folks will get even less money out.
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Old 04-12-2015, 10:54 PM
 
8,845 posts, read 5,129,939 times
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Quote:
Originally Posted by TuborgP View Post
I found it fascinating that with the new rules some folks will get even less money out.
Less cash, but with an impound account. I wonder how many years of property taxes and insurance are set aside? Too bad the article did not say.
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Old 04-13-2015, 04:53 PM
 
Location: Los Angeles area
14,018 posts, read 17,735,102 times
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The banks make out like bandits on reverse mortgages. I don't see that changing.
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Old 05-02-2015, 09:55 AM
 
93 posts, read 96,967 times
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IF you are required to do a full LESA (lender enforced set aside) the bank will escrow taxes and insurance for the entire life expectancy of the youngest borrower. this is not a requirement for everyone taking out a reverse mortgage, only for people behind on property taxes or certain types of debt within the last 2 years.

There are also residual income requirements now that vary by region. If you are current on your taxes but don't have enough income to meet the thresholds, you may be forced to receive a monthly tenure payment to make up the difference. For example- if the govt says you need $400 in residual income but you only have $300, the lender may force you to take a lifetime $100 monthly tenure payment to make up the difference.

From what I understand (and verify with a bank lenders have some wiggle room. If there are compensating factors, they can factor that in to the decision on whether or not to require a full/partial LESA.

Too many people took out reverse mortgages, blew through the cash, and stopped paying taxes and insurance. For better or for worse, this was HUDs solution to prevent future foreclosures do to delinquent taxes/insurance....
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Old 05-02-2015, 04:37 PM
 
Location: Mount Airy, Maryland
10,460 posts, read 5,926,819 times
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Quote:
Originally Posted by PhxBarb View Post
Great read Tuborg. Thank you. I wish the Fed would address the big fees associated with a RM which certainly limits the amount of money one can get out of the house.
Exactly. When I saw the thread I was thinking as anohter poster, finally they are reducing the ridiculous fees that make reverse mortgages such a bad move. Instead they are making it an even worse move.
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Old 05-04-2015, 03:08 AM
 
71,548 posts, read 71,712,424 times
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you knew it couldn't go on as it was. those needing to mortgage their home to make ends meet are not likely to be in the best financial health and likely to meet their other obligations.

usually all it taks is one unplanned major expense and they default on other things involved with the house.
the problem is few got as much as they thought they would.

reverse compounding interest is very powerful when it works against you.

even here in long island with the typical home worth more than 500k it can be quite painful.

On a $250,000 lump-sum in ten years the balance will climb to $465,841. Assuming 3% home price appreciation, that would leave about $72,000 in equity based on a home's $537,566 value. In 20 years, the loan balance would reach $868,031, exceeding the home's $722,444 value.
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Old 05-04-2015, 03:40 AM
 
Location: Copenhagen, Denmark
10,513 posts, read 8,760,423 times
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The honorable option: sell your house to a child for $1.00 with a life-estate for yourself...long before you go on Medicare. Consult a lawyer, first.
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Old 05-04-2015, 03:42 AM
 
71,548 posts, read 71,712,424 times
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be careful though , that can be one major tax disaster if the child sells that house after you are gone. it can also create tax issues for the parents if they need to sell and move at some point as they lose all or part of the tax free exclusion.

that cost basis stays with the child as opposed to inheriting that house at current market value. divorce of the child , law suites can also put that house in jeopardy for the parent..

it can create gift tax issues on both federal and state levels too.

Last edited by mathjak107; 05-04-2015 at 03:52 AM..
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