Reverse Mortgages

[TuborgP]

Originally Posted by TimtheGuy

If you knew anything about the RM candidates, you would realize that rate is not the major concern. The big factor in for RM candidates and their heirs is quality of life.

I am not as presumptious as you. I do know some candidates even my sister. I am fortunate and don't need. I am sure you would concur that each situation is within itself unique. I simply posed a question with regards to the impact of double digit inflation. I have that same concern for my sister who is a RM candidate so yes at least one family has that concern. Again many of the issues in the credit market are the result of the big what if question not being asked. I would think that you would concur that reading the paperwork and seeking advice on what if is always recommended. Agreed? I always try to think long term and not just the immediacy of the moment.

[TimtheGuy]

Originally Posted by TuborgP

I am not as presumptious as you. I do know some candidates even my sister. I am fortunate and don't need. I am sure you would concur that each situation is within itself unique. I simply posed a question with regards to the impact of double digit inflation. I have that same concern for my sister who is a RM candidate so yes at least one family has that concern. Again many of the issues in the credit market are the result of the big what if question not being asked. I would think that you would concur that reading the paperwork and seeking advice on what if is always recommended. Agreed? I always try to think long term and not just the immediacy of the moment.

Agreed. There is no doubt that the borrowers and their heirs need to know exactly how the program works and what the potential outcomes can be. They should also know if there are any alternatives to obtaining the needed/desired funds and/or cash flow.

Beside the loan officer knowledge/advice there is 3rd party counseling required. I have not attended, so I have no idea how thorough it is, but have heard it is pretty solid. It is like getting a regular mortgage...you need to work with someone who is trustworthy and is looking out for your best interests.

[TuborgP]

Originally Posted by TimtheGuy

Agreed. There is no doubt that the borrowers and their heirs need to know exactly how the program works and what the potential outcomes can be. They should also know if there are any alternatives to obtaining the needed/desired funds and/or cash flow.

Beside the loan officer knowledge/advice there is 3rd party counseling required. I have not attended, so I have no idea how thorough it is, but have heard it is pretty solid. It is like getting a regular mortgage...you need to work with someone who is trustworthy and is looking out for your best interests.

I thought we should be agreeing. I to am not sure about the third party advice. My sister is working with a supposed neutral person. She is out of state and some of what she says bothers me. I have not talked to the counselor but from what my sister says she is steering her to one company and that bothers me. The open question I had for my sister was about the impact of a variable rate in all future environments and thus by question here. I think we can both agree that when you reach our stage of life and have considerable assets everyone wants in our pockets. Try selling a house and your realtor would spend your equity like a fire sale to get the house sold. Investments hey annuities from Hades galore. Guarantee that you won't run out of money? Why should I at a 4% draw down. Wait I don't even need my investment money. Other then for health care overage and emergencies etc. But still let us manage it for you. Wait how did it get this big without you? Thus my caution about reverse mortgages. Insured by the govenrment if you select the right one and oh yeah regulated by the good old USA Government. Sorry I remember the saving and loan crisis and Enron pensions and oh yeah our current mess. Sallie and Freddie yeah they are on top of financial wisdom.

[Tfreesemann]

Originally Posted by azloafer

Troy, is that true? I thought that it never had to be paid back!

The loan has to be paid back, but if the home is worth less than the amount owed the Government Guarantee in a reverse mortgage pays the difference to the lender.

For example: if you live 30+ more years and when you pass away the home is worth 350,000 and the Reverse mortgage loan is 400,000. The house would have to be sold or refinanced and the 350,000 would go to the lender and FHA would pay 50,000 to the lender as well. They can not go after the heirs or the estate to make up the 50,000. That is one reason why you hear so much about upfront fees - FHA requires reverse mortgage borrowers to pay a Mortgage Insurance Premium. The MIP cost is really minimal when you look at the guarantees in a Reverse Mortgage.

[TuborgP]

Any new investment/equity/mortgage platform is suspect to me. Zero percent loans were heralded when they first came out ( I know they have been around just not widely used). Which also makes me wonder since one of the themes in here is why were previously generations more prepared for retirement(smarter/wiser). As far as government guarantees? Oh yeah Mr. Social Security to the rescue in 30 years. I am just seeing to many products being pushed trying to get to my assets by companies that will make a profit ( take a piece of the pie) off of my assets. Now when those companies are insurance (let me sell you an annuity and take 5% a year in fees) I really get suspicious. I do think however wonder if someone taking out a reversed mortgage 2 1/2 years ago might have done well now. Especially in California/Miami/Las Vegas where the value of that house has probably fallen 20% with more to come. Maybe I am just a tad cynical from all the literature I am bombarded with from people/companies wanting a piece of my actio

[Donna Reverse]

Originally Posted by CAVALLERI

My Mom Is Going To Be 62 And Is Thinking About A Reverse Mortgage. Does Anyone Know If The Will Give Her One With A Judgement On The House. It Is Not A Lein. She Needs To Collect Ss But It Will Not Be Enough To Pay Bills And What Remains On The Mortgage.

If they have placed a lien against the house with this judgement, it will most likely have to be paid off out of the proceeds of the Reverse Mortgage.

[Bette]

Originally Posted by CAVALLERI

My Parents Haven't Been Together For A Real Long Time And See Still Owes 70,000 But Could Sell The House For Appx. 630000.00 . Her Ss Will Only Give Her Enough To Pay The Mortgage And Nothing Else. The Judgement Needs To Be Paid If The House Is Sold. I Think She Should Sell For What Ever Pay The Judgement And Rent A Place.

There is a lot of equity there but there is a reverse called a HECM (Home Equity). You don't pay a mortgage payment again and you can get to some of your equity up to a certain point to keep living in the home. Yes, the judgment would be paid off with the loan proceeds. 62 is not that old and if they want to stay in the home, that may give them peace. When people get older, some do not relate well to change.

There were 4 of us in my family and when my parents moved from the family home, it was heartbreaking and sad for all of us. I mean, it was Ground Zero. Both my parents had no choice but to leave but I do think it affected my father's health.

Renting is hard at that age when you are used to having your own home and doing what you want.

Every situation is so different. Perhaps you and your parents can sit down and discuss it more.

[LML]

I recently took my own advice. I was ready to retire but knew that the mortgage on my lovely home would prevent that from ever happening. SO I sold it and with the equity I had in it I was able to buy a nice little older home ...in good shape...for cash. Today is my last day as a "working woman." I retire tomorrow. Independence Day indeed.

[GLS]

Originally Posted by Tfreesemann

In My Opinion

As you have pointed out, judging from the inaccuracies in some of the posts, it may be better to use "IMHO"....In my humble opinion.

I do have a question. What happens if a person already has taken out a reverse mortgage, and they change their mind about living in their house until they die. For example, if they move to an assisted living facility, and the house is no longer their "principal residence"?

[GLS]

Originally Posted by LML

I recently took my own advice. I was ready to retire but knew that the mortgage on my lovely home would prevent that from ever happening. SO I sold it and with the equity I had in it I was able to buy a nice little older home ...in good shape...for cash. Today is my last day as a "working woman." I retire tomorrow. Independence Day indeed.

Wow! Good for you and good luck. A new chapter of your life begins today.