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Old 09-30-2009, 03:52 AM
 
Location: Florida
19,823 posts, read 19,921,769 times
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Unless the kid is one that has been really financially responsible and is in trouble through no fault of their own(job loss) and has done all they could do so far, and there is every genuine expectation they WILL pay it back, no way would I use the word 'loan'.
Even in that circumstance there are so many pitfalls that I would probably still think of it as money GONE and figure everything else from there.
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Old 09-30-2009, 08:34 AM
 
29,784 posts, read 34,885,423 times
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Quote:
Originally Posted by mathjak107 View Post
well i didnt want to get off topic by going into reverse mortgages so i just made a simple statement but since you brought it up ill go on a little deeper.

i think you have a few things kind of jumbled into one thought there about the payments going on forever so ill esplain: , yes and no is the short answer,.. loan values are very low considering the maximum amount is somewhere between 20-60% of the value of ones home depending on age and interest rate and fees that are used to compute these loans right from the start..

you can take a lump sum, a credit line, or tenured payments for life. the credit line and lump sum give you the maximum amount of money but when you hit the limit payments stop. you have no more equity to borrow from your reverse mortge at this point. games over! now if you are willing to forgo about 25-30% of the monthly payment you can get a tenured payout.

basically the tenured payments are the limit of the loan divided by whatever your age is figuring 100 years old as a base. its a much smaller monthly amount you get then the other options. payments are figured to age 100 and if you live longer its on their dime and payments are continued even though the limit is reached. for that 25% less payment you are actually buying what amounts to an annuity to take over if you live passed 100 and smaller monthly payments so they last longer . truthfully the monthly payments are so low if you choose tenured between the fact that they divide your limit over 100 years worth of payments that i cant imagine most who are resorting to a reverse mortgage to live on can make do with that lessor amount. because the payments are kept so much lower they pretty much will go on for most of our lives since not many will go on to 100 to even be on their dime.

to me it sounds like an incredible amount of money to give up for that ability.


one of the biggest rip offs to seniors right now is the same people selling reverse mortgages are bundling the mortgage with high commission , huge fee annuity products to try to create a perpetual payment thing so if you do spend the limit they give you money for as long as you live,.. those fees plus the reverse mortgage fees and interest have been crushing seniors. in fact they are trying to pass a bill now forbiding any place that sells reverse mortgages from selling annuity products.

to see the effects of tenured vs non tenured you can play here:

FHA REVERSE MORTGAGE (HECM) DETERMINING TERM OR TENURE MONTHLY PAYMENTS (http://mortgage1a.com/99fhahecmcalctermortenurepymt.php - broken link)
I think the packaging with annuities is where the life long income part comes from.
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Old 09-30-2009, 08:38 AM
 
29,784 posts, read 34,885,423 times
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Quote:
Originally Posted by mathjak107 View Post
not even yourself, until you are retired
Hmmmm this is a retirement thread so many of us responding already are. Thus your response to the OP can be factored by age, where you are on your retirement horizon and oh yes the history of the relationships within your family for you as a child and now you as a parent. We are all different and that is reflected in the varied responses we are getting. Certainly lending your retirement assets at 45 is very different from 85. Don't forget the five year look back in estate planning. At what point if at all do you move forward with that? Remember there is the money you are saving for retirement for some and others the assets you now have in retirement which is all of your current assets since you are now living the La Dolce Vita
Is the five-year look-back for Medicaid eligibility for long-term care five calendar years or five years from the point of admission to a facility? - eXtension
Regulations exist to prevent people from transferring assets that could be used to pay their long-term care expenses. This eliminates, or at least postpones, the possibility of the government having to finance their long-term care through the Medicaid program. The look-back period for asset transfers with respect to an application for Medicaid is currently five years. Government officials can look at any gifts made as long as five years before the date that an application for assistance is made.

Perhaps we should have a thread discussing the value, importance and our opinions on inter generational wealth transfer. Depending on the age of the responder that is probably part of the thinking for some of us.

Last edited by TuborgP; 09-30-2009 at 08:49 AM..
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Old 09-30-2009, 08:49 AM
 
71,700 posts, read 71,829,507 times
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Quote:
Originally Posted by TuborgP View Post
I think the packaging with annuities is where the life long income part comes from.

Well the tenured payments are really where they take your maximum amount and divide it by the number of years you have until your 100. if your 62 as an example they will divide the amount after interest,fees and expenses by 38 years and thats your yearly payment.. your payment you recieve is alot less then a credit line ,lump sum or installment payment methods. those fees and interest can top 30-40,000 bucks in any case .

if by some chance you live beyond 100 they will continue the yearly payment on their dime.

Last edited by mathjak107; 09-30-2009 at 09:15 AM..
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Old 09-30-2009, 08:57 AM
 
Location: Boca Raton, FL
5,177 posts, read 8,701,447 times
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Smile An observation - a very hard issue

Quote:
Originally Posted by old_cold View Post
Unless the kid is one that has been really financially responsible and is in trouble through no fault of their own(job loss) and has done all they could do so far, and there is every genuine expectation they WILL pay it back, no way would I use the word 'loan'.
Even in that circumstance there are so many pitfalls that I would probably still think of it as money GONE and figure everything else from there.
I'm from a family where we have always helped each other. I find it interesting when parents throw these lavish birthday parties where the kid has no clue it's happening and then when they are adults (and good functioning adults), they withhold money. I would rather help my children when they really need it. 26 years ago, I had to go to my brother - we were both in our 20's then and ask he and his wife for $20K to start a business. They gave it to me. That business saved my life (literally), employed 34 people at one time and lived for 17 years. The $20K was paid back within 6 months but that wasn't the point.

There is no clear answer here. My husband and I could use some business help ourselves right now but it's the economy.

As a parent, I could not live a very comfortable lifestyle and watch my children suffer. I'm not talking about children who are reckless; I'm talking about those who suffer difficulties, whether it be financial, medical, whatever.

During life, some people need a leg up. Sometimes, they just need a hand.

I always have to look at people I know who send money to Africa and wherever (good sums) and then won't give to their own children. Oh well, balance, balance, balance.
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Old 09-30-2009, 09:11 AM
 
Location: Savannah GA/Lk Hopatcong NJ
13,106 posts, read 24,901,970 times
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Quote:
Originally Posted by Bette View Post
I'm from a family where we have always helped each other. I find it interesting when parents throw these lavish birthday parties where the kid has no clue it's happening and then when they are adults (and good functioning adults), they withhold money. I would rather help my children when they really need it. 26 years ago, I had to go to my brother - we were both in our 20's then and ask he and his wife for $20K to start a business. They gave it to me. That business saved my life (literally), employed 34 people at one time and lived for 17 years. The $20K was paid back within 6 months but that wasn't the point.

There is no clear answer here. My husband and I could use some business help ourselves right now but it's the economy.

As a parent, I could not live a very comfortable lifestyle and watch my children suffer. I'm not talking about children who are reckless; I'm talking about those who suffer difficulties, whether it be financial, medical, whatever.During life, some people need a leg up. Sometimes, they just need a hand.

I always have to look at people I know who send money to Africa and wherever (good sums) and then won't give to their own children. Oh well, balance, balance, balance.
It very well could be the way I'm reading it but it sounds like the o/p, if she lent this money and wasn't paid back it would create a hardship for her. I didn't take it as she had oodles of cash laying around and someone in that position needs to be very careful child or not to lend money out.
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Old 09-30-2009, 09:13 AM
 
71,700 posts, read 71,829,507 times
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Thats the feelng i got too
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Old 09-30-2009, 11:12 AM
 
29,784 posts, read 34,885,423 times
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Quote:
Originally Posted by Bette View Post
I'm from a family where we have always helped each other. I find it interesting when parents throw these lavish birthday parties where the kid has no clue it's happening and then when they are adults (and good functioning adults), they withhold money. I would rather help my children when they really need it. 26 years ago, I had to go to my brother - we were both in our 20's then and ask he and his wife for $20K to start a business. They gave it to me. That business saved my life (literally), employed 34 people at one time and lived for 17 years. The $20K was paid back within 6 months but that wasn't the point.

There is no clear answer here. My husband and I could use some business help ourselves right now but it's the economy.

As a parent, I could not live a very comfortable lifestyle and watch my children suffer. I'm not talking about children who are reckless; I'm talking about those who suffer difficulties, whether it be financial, medical, whatever.

During life, some people need a leg up. Sometimes, they just need a hand.

I always have to look at people I know who send money to Africa and wherever (good sums) and then won't give to their own children. Oh well, balance, balance, balance.
Great points!
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Old 09-30-2009, 11:56 AM
 
Location: Savannah GA/Lk Hopatcong NJ
13,106 posts, read 24,901,970 times
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Quote:
Originally Posted by TuborgP View Post
Great points!
Great points if one is in the position to take the financial hit if child doesn't pay them back, unfortunately many are NOT in that comfort zone, and I think if o/p was in the comfort zone where a reneg on the loan didn't negatively impact her she wouldn't have posed the question....jmo
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Old 09-30-2009, 12:21 PM
 
29,784 posts, read 34,885,423 times
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Originally Posted by njkate View Post
Great points if one is in the position to take the financial hit if child doesn't pay them back, unfortunately many are NOT in that comfort zone, and I think if o/p was in the comfort zone where a reneg on the loan didn't negatively impact her she wouldn't have posed the question....jmo
Wasn't debating about the OP as I can only assume about her position. I was complementing ANOTHER poster for making some good points in general about helping your children. Your point is right about being able to afford to help and there are those who can and do. I think her points were good and you don't and that's ok.

Note she commented about not being able to replace it not being destitute if it wasn't replaced. It could be treated like a market correction in your portfolio that may or may not come back before you die. If you are planning out to 94 and taking a 3-4% drawdown depending on your balance your principal woud be in tact at 94 and still there for your heirs. Losing part of that principle at a later age without getting back is not going to throw the train off the track.
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