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Old 08-22-2017, 02:37 AM
 
71,550 posts, read 71,712,424 times
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Quote:
Originally Posted by Cruzincat View Post
That is why you factor in those potential occurrences before you take a reverse mortgage. In our case we purchased a home with a reverse mortgage in an area close to our kids, and the wife's parents, where there are ample shopping, restaurants, etc nearby, with transportation options aplenty. We could only go mortgage free, by doing so, and the potential income from the tax deferred savings that we used for ~60% of the house value would have never come close to what a comparable home's mortgage payment would have been. We live in an expensive area, and I had to acquiesce to my wife's requirement that we live near the kids and grandchildren. This was the only way we could afford to do so.

If something happened that made us want to live to a lower cost area, we will still have ample equity for more than a few years, that we could use to do it over again somewhere else, where it would cost a lot less for a new house.

Our RE agent said no one had ever looked at as many houses before settling on one.

Problems can occur in any case, whether you have a reverse mortgage, or a standard one.If you prepare for most possible problems, the odds of one blindsiding you are lessened.
a reverse mortgage to purchase is very different . it is not the same thing just because they are given lots of thought .

we considered as a way to buy a luxury condo that we typically would not buy .

because the program was designed to help out seniors with out a lot of money it is considered a higher risk loan and the terms of the loan just was not great . it would have eaten up equity way faster than i liked
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Old 08-22-2017, 02:40 AM
 
71,550 posts, read 71,712,424 times
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Originally Posted by AlaskaErik View Post
I stay away from anything pitched by aging celebrities. That aside, I can't imagine any financial product involving real estate worse than a reverse mortgage.
another problem is the majority of reverse mortgage receivers are now taking lump sum.

that reverse compounding interest can be killer.

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 08-22-2017, 06:14 AM
 
Location: Beautiful Rhode Island
6,851 posts, read 11,116,567 times
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Quote:
Originally Posted by mathjak107 View Post
another problem is the majority of reverse mortgage receivers are now taking lump sum.

that reverse compounding interest can be killer.

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.
But if you're 80 and you can't stay in your home otherwise, is it still a bad idea? Especially if you don't care about leaving money to heirs?
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Old 08-22-2017, 06:20 AM
 
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if the money meets your needs it can be okay . but many times over time you come up short as expenses rise . the bank can also demand you repair or replace things you can't afford to do . it is in your agreement that you will keep the house in good condition up to the level the lender wants .
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Old 08-22-2017, 06:40 AM
 
Location: Michigan
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Outright selling your home to an investor, (IF property is desirable in some way, in the path of growth, etc) but keeping a life estate (you can live in house until you die, THEN he gets it) can work out well. It certainly did for my wife's mother. She actually outlived the investor by 10 years, LOL.
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Old 08-22-2017, 07:13 AM
 
Location: Blue Ridge Mountains
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Originally Posted by AlaskaErik View Post
His screen name is a good clue.
Good catch!
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Old 08-22-2017, 07:40 AM
 
Location: Hiding from Antifa?
6,410 posts, read 4,176,382 times
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Quote:
Originally Posted by mathjak107 View Post
a reverse mortgage to purchase is very different . it is not the same thing just because they are given lots of thought .

we considered as a way to buy a luxury condo that we typically would not buy .

because the program was designed to help out seniors with out a lot of money it is considered a higher risk loan and the terms of the loan just was not great . it would have eaten up equity way faster than i liked
The distinction here is that it is foolish to say that it is a bad idea for everyone in any situation to consider a reverse mortgage. Having done one now, with good reasons, I have little respect for anyone who dismisses reverse mortgages as never being a good idea, without bothering to consider it might be good for someone else, because it wouldn't be good for them. We have too many politicians these days who feel that way, and they have made life miserable for many.
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Old 08-22-2017, 07:47 AM
 
71,550 posts, read 71,712,424 times
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i never said it is bad for all . i pointed out the negatives .

in our case i looked in to a reverse mortgage to purchase and the math was a poor deal . the fact is they are priced as higher risk mortgages as a group .

are you going to tell us you got the same interest rate and fees as a first mortgage ? i would doubt that

i don't see me telling anyone else not to look in to it . you are reading in to things more than i posted .

as far as regular reverse mortgages , people have to be aware of all the negatives . it is up to them to take what they learned and analyze things
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Old 08-22-2017, 07:55 AM
 
Location: DFW - Coppell / Las Colinas
32,010 posts, read 36,629,245 times
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I also never said it was a bad idea for everyone. That's too broad of a statement.

Yet, In my 20 years of selling homes I've talked to quite a few that did have a reverse mortgage and not a one said it was a good idea. I can only go with my experiences.

I'd just sell the home and rent an apartment if I was that desperate.
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Old 08-22-2017, 08:06 AM
 
Location: Colorado Springs
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Quote:
Originally Posted by Rakin View Post
I also never said it was a bad idea for everyone. That's too broad of a statement.

I'd just sell the home and rent an apartment if I was that desperate.
That's the best solution for most people. Another is to sell the old place and buy a much smaller place for cash if the market permits.
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