Reverse Mortgages (community, federal, states, coverage)

[azloafer]

Isn't the whole idea, lose the house or not, to eliminate the mortgage payment and maybe even have a monthly income? We don't see how we could both be retired and still make huge house payments. We are house rich. Downsizing still puts us buying another house and keeping up the repairs even though the payment is smaller. We are in a three year old house now; it would be hard to move into an older and smaller house and have more upkeep problems because of its age. Am I wrong???

[azloafer]

Can we please hear from someone who actually has a reverse mortgage rather than somone who just thinks that it is a bad idea?

[dreamofmonterey]

Originally Posted by azloafer

Isn't the whole idea, lose the house or not, to eliminate the mortgage payment and maybe even have a monthly income? We don't see how we could both be retired and still make huge house payments. We are house rich. Downsizing still puts us buying another house and keeping up the repairs even though the payment is smaller. We are in a three year old house now; it would be hard to move into an older and smaller house and have more upkeep problems because of its age. Am I wrong???

You are NOT eliminating a mortgage by getting a reverse mortgage. They are tapping into your equity. My father had one and the interest was usurious. Just trying to help.


sunny

[dreamofmonterey]

Originally Posted by sunnyhelena

You are NOT eliminating a mortgage by getting a reverse mortgage. They are tapping into your equity. My father had one and the interest was usurious. Just trying to help.


sunny

reverse mortgage is not always a good idea. Protect your family first. RM's tap into future equity.

S.

[Miss Blue]

The only way I would even consider a reverse mortgage would be if I had no heirs, and wanted to travel, but did not have the money .My husband received some literature on it awhile back. Here is what they offered. They valued our home at 80% of the market value, they wanted to deduct 7,500 for closing costs,this did not include title search which they wanted 1500 for, we only owe 8,000 on our home (fair mrkt malue is 170,000.). They wanted 750 handling fee to pay off the house,,etc. It went on and on, and on. After the first page, I realized it was a scam..Can't see why in the world the government would reccommend it. I am 65, my husband is 69. We are both exceptionally healthy, and have plenty of children and grandchildren to leave our assets to..In the meantime, we are perfectly able to care for our house and lawn,and will continue. (Well, at least I will, hubby just retired and fishes or visits relatives all thr time)

[azloafer]

I talked to the people at my bank regarding the reverse mortgage. I was told that the payments would stop and I would receive x amount (depending on how I take it) of dollars each month until both of us leave the house or until death. It doesn't matter if it is 10 years or 40 years, we are guaranteed that money as long as we are alive and we would never owe more than the house is worth at sale. This is guaranteed in writing so that even if we both died the bank can't go after heirs for money if the sale price is low due to a bad market. Basically, they explained that a reverse mortgage is for people who have a house, but are burdened by the payments and the fact that most of their money is stuck in the house. With the money tied up in the house the people do not have enough left for a decent life. They gave this example: House valued at $200,000. $50,000 left on mortgage. Mortgage payment $800. Reverse mortgage stops monthly mortgage payment and gives people $500 per month until death or until both leave the property. The end result is that the $800 added to the $500 means that the people receive a benefit of $1300 per month as tax free income versus paying out $800.00. All costs are figured into the mortgage and there are no out of pocket expenses. These figures were given as an example and are different for everyone. What impressed me is that the people can never owe more than the house is worth. The way I see it is that the people in this example now have an income of $500 and no longer pay out the $800. This means that they can now do things that they could not before. Of course, you have to be ready to give up the house in the end, but who cares after you are dead.

I see the difference as sitting home and not being able to do anything versus being able to travel and live a decent life. Am I missing something?

[NewToCA]

azloafer, the payments made to you in the reverse mortgage have an imputed interest rate. As a result, the maximum paid to you cannot go on the rest of your life regardless of age. To do so would jeopardize the "lender" in providing funds in excess of property value.

Their has to be a "cap" on the amount they will ultimately provide.

[azloafer]

Originally Posted by NewToCA

azloafer, the payments made to you in the reverse mortgage have an imputed interest rate. As a result, the maximum paid to you cannot go on the rest of your life regardless of age. To do so would jeopardize the "lender" in providing funds in excess of property value.

Their has to be a "cap" on the amount they will ultimately provide.

That's what I thought, but they showed me the section that guaranteed no limit to the monthly payments and also a guarantee that the amount owed would never exceed what the house would sell for. They sell the house as "owners." I have an appointment this AM, but I will attempt to post something from the mortgage later...

[GARYNJANET]

Reverse Mortgages Are Not All Bad, They Are Very Good If You Go To The Right Person. They Are A Way For A Person To Stay In Their Home, Where They Feel Secure, And Not Have To Move. The Home Remains In Their Name, The Bank Does Not Take The Home Away. They Are Qualified Based On Their Age And Equity Of Their Home.

They Have Several Options As To What They Can Do With Their Equity. They Can Take It All In One Lump Sum, Or Have A Certain Amount Given To Them Monthly, Or Put In An Interest Bearing Account, Or All Three.

Many Children Discourage Their Elderly Parents From Doing A Reverse Mortgage Because They Want The Equity For Themselves Down The Road After The Parents Pass On.

A Good Reverse Mortgage Will Demand The Homeowner To Have A Special Phone Counseling Session, That The Morgage Company Provides, To Make Sure That The Homeowner Fully Understands The Loan, And To Make Sure That The Homeowner Is Being Properly Represented By The Loan Officer.

The Reverse Morgage Is A Life Saver To Many Elderly People, Providing They Have Chosen A Reputable Loan Officer.

[NewToCA]

So it is possible that the lender will provide a monthly total, over time, which will exceed the value of the property?

If this is true, how do they make money, considering that any equity left in a property still belongs to the owner?