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Meh. Anyone who takes out a reverse mortgage is not bright. That is nothing more than the bank fleecing you.
I don't think that is true at all. I think a RM can be a useful tool in some circumstances. I am certainly considering how I might use one to stretch my resources. I may never take one; it is too soon to tell.
I was surprised he could take a Reverse Mortgage with an existing mortgage on the property.
You can if you have enough equity. But you can't keep both mortgages; note that the proceeds mostly went to pay off the existing traditional mortgage. So he went from having a house payment due every month to not.
My mother took out a reverse mortgage after my stepfather died and she was left trying to survive on $1200 a month. He only had a small life insurance policy and to keep this short I won't go in to all the reasons he didn't make sure she wouldn't have to go through all this.
She used the reverse mortgage to redo the pool thinking she would sell the house which she didn't do. If she just used the reverse mortgage to help her with her monthly expenses it might have lasted her till she passed (she's 81) but she didn't. A reverse mortgage might be a good option for people who know how to budget and who don't have heirs who "expect" to have the house willed to them.
In this case he had nothing to mortgage. All he did was replace his existing mortgage with the reverse mortgage which did NOTHING for him. I guess his reasoning might have been that with the reverse he could stay in a home he couldn't afford.
Best thing he could have done is sold the home; pay off the mortgage and find a home he could afford.
In my RE Career, I have yet to talk to anyone who did not regret taking out a Reverse Mortgage.
Interesting....but are you sure there is no selection bias? Meaning that you'd only have reason to talk with those who are unhappy and those that it worked out well for you'd never hear from (or think to inquire if they'd had a reverse mortgage)?
In this case he had nothing to mortgage. All he did was replace his existing mortgage with the reverse mortgage which did NOTHING for him. I guess his reasoning might have been that with the reverse he could stay in a home he couldn't afford.
Best thing he could have done is sold the home; pay off the mortgage and find a home he could afford.
Not true....it eliminated the P&I obligation. But in this case even the T and I part alone was apparently too much...
In this case he had nothing to mortgage. All he did was replace his existing mortgage with the reverse mortgage which did NOTHING for him. I guess his reasoning might have been that with the reverse he could stay in a home he couldn't afford.
Best thing he could have done is sold the home; pay off the mortgage and find a home he could afford.
Did nothing for him? He couldn't afford to make the payments, so the RM kept him in the home!
I agree that he should have just sold the home. And he still can do that, but now he also owes the RM fees and accrued interest.
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