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Yes, you still technically own your home, but there are all kinds of rules regarding residency, which can be problematic if the homeowner needs to be in a nursing home, etc.
Once you have a reverse mortgage than the mortgage company makes the rules. It was not a positive experience.
Interest rates are absurd. When the house is eventually sold the bulk of the sale will go to the reverse mortgage company
Yes, you still technically own your home, but there are all kinds of rules regarding residency, which can be problematic if the homeowner needs to be in a nursing home, etc.
Mortgage servicers don't send people knocking on doors. How did this become known?
Once you have a reverse mortgage than the mortgage company makes the rules. It was not a positive experience.
Interest rates are absurd. When the house is eventually sold the bulk of the sale will go to the reverse mortgage company Well, yes, mortgage balances are usually paid somehow, via sale or refinance by heirs, when the owners pass away, unless there are no heirs and nobody liable. Was there an option to keep the property with a regular mortgage, and what would have resulted, stress-wise, if that route had been taken?
First I'm sorry for your situation. I am experiencing it with my parents and they are stubbornly demanding to remain in their two-story home, although my dad has fallen down 25 times in the past couple years. At least the times that they tell me about. The addition of a quasi-exotic mortgage to the intense stress of Parent Care had to be tough.
It sounds like you chose a Variable-Rate option, or your experience was prior to 2015. There are Fixed-Rate Reverse Mortgages now and that is what I recommend.
First I'm sorry for your situation. I am experiencing it with my parents and they are stubbornly demanding to remain in their two-story home, although my dad has fallen down 25 times in the past couple years. At least the times that they tell me about. The addition of a quasi-exotic mortgage to the intense stress of Parent Care had to be tough.
It sounds like you chose a Variable-Rate option, or your experience was prior to 2015. There are Fixed-Rate Reverse Mortgages now and that is what I recommend.
Isn't true that with a fixed rate HECM the borrower will get less cash out?
IMHO: when considering a reverse mortgage, deciding to go with a Fixed Rate or an ARM depends on the situation and need of the borrower.
The only way to have a credit line is to take an arm. So if you dont need all available proceeds right away you shouldn't take them. leave the equity in the home. you dont get charged interest on an unused credit line and the unused credit line has guaranteed growth for the life of the loan. More money available if/when you actually need it. The ARM also gives you the option of turning on or off a Tenure/Term payment at any time. Today's Annual ARM's are capped at 5% above the start rate and can not adjust more than 2%/year. The unused credit line grows by the note rate + ongoing MIP.
Fixed Rate HECM's are closed end loans. no credit lines, just lump sum payouts at close. You are also limited to 60% of what you qualify for (unless you need the additional 40% to pay off a mandatory obligation, like a mortgage). unless you need all available proceeds right away, IMO a fixed rate reverse mortgage makes little sense. Why cash out equity in your home to put into a bank or a risky investment, when you can preserve the equity and get guaranteed compound growth of 4-5%+ on the available credit line?
in today's marketplace the ARM's are also more attractive to investors, so loan officers/banks usually make more money on them. sometimes a LOT more. savvy consumers can leverage this into paying zero origination fees and/or receiving large credits towards closing costs.
Last edited by anicon; 07-13-2019 at 09:17 AM..
Reason: content, spelling
Yes, you still technically own your home, but there are all kinds of rules regarding residency, which can be problematic if the homeowner needs to be in a nursing home, etc.
the home must continue to be the primary residence of at least one borrower or Eligible Non Borrowing Spouse. otherwise, the mortgage comes due. you need to live in the home a minimum of 6 months and 1 day out of the year for it to be considered your primary. The servicing company sends annual occupancy letters that need to be returned.
You bring up a very good point about nursing homes. If there is an eligible non borrowing spouse on the loan (meaning they are able to defer the mortgage payoff and stay in the home for life if the borrower passes away) they do not have this option to defer if the borrower moves into assisted living. Only if the borrower passes away.
Quote:
Originally Posted by daliowa
Once you have a reverse mortgage than the mortgage company makes the rules. It was not a positive experience.
Everyone should read their loan documents. Carefully, before signing them. Responsibilities of the borrowers and triggering events that cause the loan to come due are all spelled out. The home must continue to be your primary residence, you need to pay your taxes and insurance, you need to maintain the property.
Quote:
Originally Posted by daliowa
Interest rates are absurd. When the house is eventually sold the bulk of the sale will go to the reverse mortgage company
interest rates vary based on market conditions and are negotiable at time of origination. I see ARM's margins today from 1% to 3% and Fixed Rates from the low 4's to 5%.
the home does not need to be sold at the end. Borrowers or the estate can refinance or pay off the mortgage and keep the home. sometimes for less than the mortgage balance if the home is upside down. You also only pay off what you owe, so if there is equity in the property when the home is sold it goes to the estate.
Based on the numbers I found, my small soc sec ($720) is not adequate.
Question: Could I qualify without stbx if I request a set aside? I planned to do that anyway for taxes and insurance.
That way, he could be cashed out, title would be in my name, and it would be done and over.
Thank you.
You need to find a LOCAL reverse mortgage expert you like and trust. They can give you the expert level answers you seek. In general, you can request a LESA, life expectancy set aside, if you have sufficient equity and that could help you pass the financial assessment. Reducing other debt and obligations could help you qualify, but again, your situation is such that you really need to get in front a local expert in your area so you can get the help you need. Good luck with your loan!
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