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Old 08-23-2017, 02:19 AM
 
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Quote:
Originally Posted by Cruzincat View Post
RMs can be set up in different ways.


existing ownership equity:
RM with payments to owner for a designated term (ie: ten years) then $0.00.
RM with smaller payments for a longer term or even until owner dies or sells it or moves out.
RM with no payments to owner, due to small equity to start with. No term limit.
Purchasing with RM:
Purchasing with ~60% down and RM covers the rest. Start out with ~60% equity which gets smaller over time. No limit to how long you can stay in the house.
Purchasing with more than 60%, you can get them to make payments to you, or the equity decreases at a slower rate. Doesn't make sense to me to do this.


I have never seen how it can be equated to having a balloon payment due in the future. Perhaps you could explain?
you actually owe that money they give you plus interest . all that money you got is actually a loan .

it just keeps adding up until you reach the limit of what it can accrue to which is in your loan agreement . .

but you don't have to pay it back until you move , break the terms of the agreement or die .

then you or your heirs actually get a bill or balloon note due . but in the case of the reverse mortgage the lender already had you sign a deed in lieu so you or your heirs can opt to have the house sold by the bank to satisfy the loan or pay off the loan and get clear title .

Last edited by mathjak107; 08-23-2017 at 03:11 AM..
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Old 08-23-2017, 10:07 AM
 
Location: Idaho
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Quote:
Originally Posted by BayAreaHillbilly View Post
Spam's getting worse again.

I even saw one of the ones in Cyrillic script on one of the other subforums here earlier today.

That's probably even worse than spam, it's probably malware.
Please use the report feature if you feel a post is suspicious. Moderators do not read all posts in all forums and this is one of the better ways to bring it to their attention. Thanks.
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Old 08-23-2017, 01:04 PM
 
Location: Hiding from Antifa?
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Quote:
Originally Posted by mathjak107 View Post
you actually owe that money they give you plus interest . all that money you got is actually a loan .

it just keeps adding up until you reach the limit of what it can accrue to which is in your loan agreement . .

but you don't have to pay it back until you move , break the terms of the agreement or die .

then you or your heirs actually get a bill or balloon note due . but in the case of the reverse mortgage the lender already had you sign a deed in lieu so you or your heirs can opt to have the house sold by the bank to satisfy the loan or pay off the loan and get clear title .
So, if you go into the Reverse Mortgage, knowing all the above, especially the part about the heirs may not receive anything, what is the problem?

The money they helped me buy the property with is what I owe them right away, and if I would sell the house right away, they would get their cut out of the sale. I only see a potential problem if I decide I want to sell and they tell me I have to pay them off before I sell it.

The last house we purchased, we made the mortgage payments every month, and the mortgage got smaller with each payment. In an ideal world that would have been great, but we didn't live in an ideal world in ~2008. We lost all our equity anyway. We eventually did a short sale and at the same time got a reverse mortgage to buy a new, smaller house, so that we could retire. Now we have no mortgage payments and we know exactly what is going to happen to the equity. It will get smaller, unless there is a tremendous increase in home values, which has happened in the past. But even if it never happens, we will be alright.

Imagine someone living in a high cost area with an expensive home wants to retire and move to live somewhere else, whether it is a lower cost area or not. Whatever equity they have in their old home could be used to purchase something almost twice as expensive in the new location using a reverse mortgage. They would have no mortgage payments. They could conceivably purchase a lakefront or oceanfront home in what many would consider an upper class type neighborhood. And they might have just moved from a lower middle class neighborhood. As long as they can afford the taxes and insurance they are good to go. I imagine there are a lot of people who might take that approach if they knew it were possible.
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Old 08-23-2017, 01:08 PM
 
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the problem is the condo we were interested in was almost 7 figures .

the heirs don't always get nothing . it depends on what it sells for vs how fast the interest ,expenses and fees compound .

in my opinion it was way to accelerated in a reverse mortgage to purchase . the terms were really not great and compared to us just buying a cheaper , more normal place with a conventional mortgage it really made the deal not worth it .

it was almost like comparing leasing a car to owning a car but with a really poor lease deal . i don't mind paying a bit more but it was just to far out of whack when you looked at the costs .

that is not to say it is not a good thing for someone strapped for cash . but to just walk away from so much money was not for us .
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Old 08-23-2017, 10:34 PM
 
Location: Hiding from Antifa?
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Quote:
Originally Posted by mathjak107 View Post
the problem is the condo we were interested in was almost 7 figures .

the heirs don't always get nothing . it depends on what it sells for vs how fast the interest ,expenses and fees compound .

in my opinion it was way to accelerated in a reverse mortgage to purchase . the terms were really not great and compared to us just buying a cheaper , more normal place with a conventional mortgage it really made the deal not worth it .

it was almost like comparing leasing a car to owning a car but with a really poor lease deal . i don't mind paying a bit more but it was just to far out of whack when you looked at the costs .

that is not to say it is not a good thing for someone strapped for cash . but to just walk away from so much money was not for us .
Even what we did by purchasing a home with a reverse mortgage, I would consider a last resort solution for most people. It was our only solution given our needs and circumstances. We are happy with how it worked out so far and we still see no issues coming in the future that might change that.
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Old 08-24-2017, 03:32 AM
 
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as you said , it was your only solution .

that is what they are designed for .


but when one has choices it can be a different story . having money may not buy happiness but the one thing it does buy is choices .

we could not see plunking down hundreds of thousands of dollars which is about 1/2 and in short order having it evaporate so quickly . so in this case we have other choices that will work just fine .
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Old 08-24-2017, 07:49 AM
 
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We are keeping RM in the back of our minds as one of the "things to think about as we get closer to retirement age". We have no heirs, so that is not a concern for us. And it's possible the whole RM market will change a lot as more and more Baby Boomers retire. Whether that's for the good or bad remains to be seen, of course. We know 2 individuals who took out RMs years ago and both are very happy they did so.
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Old 08-24-2017, 08:00 AM
 
Location: Colorado Springs
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One thing that I've learned is that you can use a RM to buy a new place, e.g. put $200K down on a $400K place and make no payments.

It might be a way to live in an expensive place that would otherwise be unaffordable.

Personally, I plan to not use a RM because the fees are way too high. If we move, we'll just sell the old place and either rent or pay cash for a smaller new place.
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Old 08-24-2017, 08:43 AM
 
Location: Hiding from Antifa?
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Quote:
Originally Posted by Vision67 View Post
One thing that I've learned is that you can use a RM to buy a new place, e.g. put $200K down on a $400K place and make no payments.

It might be a way to live in an expensive place that would otherwise be unaffordable.

Personally, I plan to not use a RM because the fees are way too high. If we move, we'll just sell the old place and either rent or pay cash for a smaller new place.
If you find a place you want to live in for the rest of your life, why would you be concerned about the fees? The fees would be there in a regular house purchase, except that you need to stay in the house long enough for the appreciation to surpass them before you sell. If you never plan on moving again, you wouldn't be concerned about the fees. If you are not planning to stay in the house forever, then you probably don't want a Reverse Mortgage in the first place.

You can buy a house in an area that is higher cost, but you have to be able to pay higher RE taxes, and insurance. Just something more to consider. If we had been in a different situation financially, we might have done that. We ended up downsizing, like what I had planned to do before the housing crunch eliminated our equity in the older house.
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Old 08-24-2017, 10:15 AM
 
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i can buy a "normal ,very nice co-op apartment here for 350k and pass it on to the kids and it likely will be worth far more . in fact it is down the block from the luxury one .

what i rather not do is have an almost 500k down payment evaporate in a relatively short time in the luxury one with those terms and they likely will have nothing left over . with those terms it is unlikely normal area appreciation will go up enough so there is some value left . reverse compounding is definitely not your friend .

if we had no choice it would be a different story , but to us it is just throwing to much money away in fees and "excessive " interest because the terms are so much higher .
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