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Old 02-09-2008, 07:53 PM
 
Location: Out there somewhere...a traveling man.
40,176 posts, read 49,373,652 times
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Christina0001 is pretty much right on target with her post. Reverse mortgages are not for everyone, but with many seniors they are invaluable. They get a lot of money up front to do as they please with it, and it only needs to be repaid upon death or sold. Fees are nominal if any at all.
Anyone contemplating a reverse mortgage should consult first with a family finance counselor or family lawyer for advice for their particular situation.
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Old 02-15-2008, 10:15 AM
 
4,901 posts, read 12,227,766 times
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Quote:
Originally Posted by DMenscha View Post
You don't have to make regular payments on a HELOC. The interest will accrue to the principal balance. It's a line of credit, not an amortized loan.
??
You do have to make monthly payments on a HELOC. You have to pay the interest monthly on the amount that is currently outstanding. You also have to qualify for a HELOC with credit score and income

With a reverse there is no qualifying with respect to credit or income AND you never have to make a payment.

So, some people can't go the HELOC route.
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Old 02-15-2008, 10:54 AM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 33,939,396 times
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Quote:
Originally Posted by TimtheGuy View Post
??
You do have to make monthly payments on a HELOC. You have to pay the interest monthly on the amount that is currently outstanding. You also have to qualify for a HELOC with credit score and income

With a reverse there is no qualifying with respect to credit or income AND you never have to make a payment.

So, some people can't go the HELOC route.

It is still a heavily front end loaded product much more friendly to the bank than the consumer....

Tips For Consumers On Reverse Mortgages (http://www.consumerlaw.org/initiatives/seniors_initiative/tips.shtml - broken link)

It is also top stopped at a relatively low level for many older folk.

I am sure there is someone whom the product fits...but it is a small set.
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Old 02-18-2008, 11:47 AM
 
Location: Massachusetts
1 posts, read 1,193 times
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Quote:
Originally Posted by bentlebee View Post
A heloc rate will go up and up and up, or you have to lock it in which my bank told me I can do 2 times over the whole period that I have the heloc (best to do when you need a big amount), otherwise the rates are going up almost like sub prime, so basicly it is more for a short time use or you have to lock it.

Also, I've done the math. The finance cost of a $175,000 30 year mortgage at 5.75% is about $160,000. Compared to a HECM, the finance cost of the accrued interest based on todays rate would take 15 years to match. If we're talking about a senior adult in their 70's I'd say the HECM is a no brainer. The reverse mortgage compared to a conventional mortgage or HELOC can be best described with this phrase, "Pay me now, or pay me later". The cost of the mortgage is low when you figure it out over a 10-20 year period of time. Cash you pay out for a monthly mortgage is now in your pocket. The only other way to access money from your home equity is to sell. If you are selling you have to figure the 6% sales consession paid to a realtor. So, in some cases the realtor fee exceeds the up front cost of the HECM. And the senior gets to stay at home for as long as he or she wishes with no financial worries. The most common objectios I see are from children who are more worried about their inherritance than their parents financial well being. There are many reverse mortgage programs, some insured by FHA and some are not. If you have a home worth more that the maximum FHA limit of $362,000 you may want to look into a jumbo reverse mortgage product. Do your research and for God's sake if you are talking to CPA's, attorneys or Financial Planners make sure they have some experience with the program. Many myths about the program have not been debunked and you may be warned to stay away from them. Ignorance about the benefits run rampant among some financial professionals and fear of collusion is floating in the back of their minds. Plus, they want you to invest in their products to grow wealth, not access the wealth that already exists in your home equity.
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Old 02-19-2008, 12:49 AM
 
Location: Woodbridge Twp NJ
316 posts, read 1,147,642 times
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this is a goverment loan they are back by uncle sam.
so even if you value falls below market value you can't default on the loan.
also christina0001 was right in what she said . So say an older person got in trouble for one reason or another this a great way to bail them out without paying for it now.
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Old 02-20-2008, 10:38 AM
 
Location: Cape Cod
1,038 posts, read 3,593,233 times
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I looked into this for my mother-in-law. Four kids, two agreed it was for her, two didn't (worried about their inheritance).
I did take her to the independent counselling which is mandatory. From what I recall, you could actually combine the initial disbursement with a HELOC. Interest would only accumulate on the initial disbursement and any money actually withdrawn on the HELOC.
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Old 02-20-2008, 10:42 AM
 
Location: Cape Cod
1,038 posts, read 3,593,233 times
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Also, one more thing, if the value of the home decreases to a point where it cannot be sold for the amount owed, the lender takes the hit. Not the remaining family members. That's one of the explanations given to me for the high upfront costs. The lender is not guaranteed that they'll get all their money back 10 years from now. It's not a great risk from my perspective, but that was one of their rationales.
I have only spoken with one more "traditional" lender who seemed to have a good grasp on how they work. They don't write them, as a rule, and don't like them because it cuts into their business.
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Old 05-15-2008, 08:16 PM
 
1 posts, read 1,155 times
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I will gladly speak or email with anyone that wants more details on a reverse mortgage. It's very important to understand this program before making a decision. It is a very valuable program for those the "need" or "want" it.
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Old 05-16-2008, 06:41 AM
 
Location: Prospect, KY
5,284 posts, read 18,213,609 times
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We have friends that are in the process of getting a reverse mortgage. They will live in their home for the rest of their lives and never have a house payment. They will initially get a line of credit that will help them pay off bills and do some remodeling and then receive a monthly payment for the rest of their lives. The only other alternative for them is to lose their home.

My understanding is that you have to have quite a bit of equity in your home in order to obtain a reverse mortgage. You must undergo credit counseling. You can sell your house and move, but you must pay back the amount you have already borrowed (plus interest) to the bank carrying your reverse mortgage.

There is so much misinformation about reverse mortgages. Here is a link with the real info:

HUD Reverse Mortgage for Seniors (HECM)
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Old 05-16-2008, 04:17 PM
 
4,901 posts, read 12,227,766 times
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Quote:
Originally Posted by bentlebee View Post
A heloc rate will go up and up and up, or you have to lock it in which my bank told me I can do 2 times over the whole period that I have the heloc (best to do when you need a big amount), otherwise the rates are going up almost like sub prime, so basicly it is more for a short time use or you have to lock it.
HELOC rates are generally tied to the prime rate, so they have been coming "down down" as of late. They do not only go in one direction
Quote:
go up and up and up, or you have to lock it
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