Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
they are almost borderline criminal in the way they workout...
Oh, c'mon, that's a bit of an overstatement don't you think? They provide people who have no other alternative with steady monthly income that they never have to repay while living in their house or worry about the extra monthly income coming to an end. If you're not worried about leaving an estate to heirs, the costs are almost irrelevant. The simple bottom line is that a reverse mortgage can increase the homeowner's standard of living by providing extra income to someone who might only be living on SS payments.
And speaking of costs.... I could make a traditional mortgage look criminal as well:
"Ooooh, don't take out a mortgage! If you borrow $200,000 at 5% you'll end up having to pay $379,011!!. You have to pay $179,011, just to borrow $200,000! And that doesn't count the upfront costs of several thousand dollars that they hit you with! Talk about criminal!"
well there are alot more fees and twists and turns in these....
the problem is the max amount most folks can get is alot less then the appraised value.. the fees and interest and insurance you have to take further erode what you get..
for someone with no choice then they have no choice...
i would sooner look to take a partner in on the house ,id probley be ahead .
they are looking to pass a bill banning those that are involved with selling reverse mortgages to be able to sell annuity products.
homeowners have been talked into packages rolling the money from the mortgages into further high fee and commissions in various annuity payout deals..
well there are alot more fees and twists and turns in these....
the problem is the max amount most folks can get is alot less then the appraised value.. the fees and interest and insurance you have to take further erode what you get..
for someone with no choice then they have no choice...
i would sooner look to take a partner in on the house ,id probley be ahead .
they are looking to pass a bill banning those that are involved with selling reverse mortgages to be able to sell annuity products.
homeowners have been talked into packages rolling the money from the mortgages into further high fee and commissions in various annuity payout deals..
let the buyer beware is all i can say.
Those are legitimate problems with the humans involved and not necessarily the product. I am no fan of reverse mortgages but much of the problem is with those associated with the marketing and sales and followup of. We had a thread here once on accessing the equity in your house and reverse mortgages are part of the equation for some. That can be one of the shortcomings of paying cash for your house, how to access the equity if you need it. I suspect Madman would advocate that is why he believes in financing your retirement home and having the resulting money invested and more accessible.
I am finding that the older retirees who still make mortgage payments seem to find this option attractive. The benefit of no longer making the mortgage payments, in addition to the large monthly reimbursements, seems to be a lot of "fun" for those over 75.
And...they get to stay in their house as long as they want.
the warning on a reverse mortgage is that typically folks get alot less then they thought... typically a 250,000 dollar home will be loaned somewhere between 30-80% of the equity you have in it with 80% almost being a legend its so rarley given out.
then fees and the insurance on the sale at the end to protect the lender can pull another 25-30,0000 out. then depending on your age there is interest ,lots of interest factored in on top of the fees...
you then have a few options for getting the money
the lump sum option can be dangerous as you can find you blew thru the money early on and have no more money do you
the lifetime payment takes age 100 , subtracts your age and then divides the amount by all those years.. depending on your age that amount may be an amount way smaller then what you thought your house would get you.
a senior would have far more simply selling the house if thats an option.
then there is the fact that many of those un-ethical mortgage brokers from
the real estate debacle found a new career prying on seniors with one of the most complicated of all products out there the reverse mortgages.
right now we have many many reverse mortgages being offered that contain fine print where you agree to equity appreciation sharing. it means if the value of the house rises over time when its sold they not only got the fees and interest but they share in future appreciation too....... we have a case here in ny where a woman died shortly after taking 78,000 in reverse mortgage payments and fees and the lender wants 200,000 as it had the equity sharing clause.
to bolster and provide a higher lifetime income seniors have been talked into taking the payments from the reverse mortgage and rolling them into another high fee product the annuity.
its a mine field of business waiting to grab a seniors cash and anyone taking one better have an attorney read all the fine print.
yes your all right the product itself has good intentions but its the brokers and bankers that have turned it into a goldmine prying on those who are most vulnerable, our seniors
Last edited by mathjak107; 04-28-2010 at 04:16 AM..
the warning on a reverse mortgage is that typically folks get alot less then they thought... typically a 250,000 dollar home will be loaned somewhere between 30-80% of the equity you have in it with 80% almost being a legend its so rarley given out.
then fees and the insurance on the sale at the end to protect the lender can pull another 25-30,0000 out. then depending on your age there is interest ,lots of interest factored in on top of the fees...
you then have a few options for getting the money
the lump sum option can be dangerous as you can find you blew thru the money early on and have no more money do you
the lifetime payment takes age 100 , subtracts your age and then divides the amount by all those years.. depending on your age that amount may be an amount way smaller then what you thought your house would get you.
a senior would have far more simply selling the house if thats an option.
then there is the fact that many of those un-ethical mortgage brokers from
the real estate debacle found a new career prying on seniors with one of the most complicated of all products out there the reverse mortgages.
right now we have many many reverse mortgages being offered that contain fine print where you agree to equity appreciation sharing. it means if the value of the house rises over time when its sold they not only got the fees and interest but they share in future appreciation too....... we have a case here in ny where a woman died shortly after taking 78,000 in reverse mortgage payments and fees and the lender wants 200,000 as it had the equity sharing clause.
to bolster and provide a higher lifetime income seniors have been talked into taking the payments from the reverse mortgage and rolling them into another high fee product the annuity.
its a mine field of business waiting to grab a seniors cash and anyone taking one better have an attorney read all the fine print.
yes your all right the product itself has good intentions but its the brokers and bankers that have turned it into a goldmine prying on those who are most vulnerable, our seniors
Yes as we get older we learn that rather than earning money the honest way there are those who would take others the dishonest way. Some of these same people were selling sub prime mortgages a few years ago and lurk in forums like these waiting to PM people at the right time. This is why I started a thread on how to capture the equity in your house some time ago. It becomes an issue for many. //www.city-data.com/forum/retir...your-home.html
I agree with mathjak107, think they should be against the law. I think that they are no more than another scam by the banking, morgage co, and Ins. industries. I've lost respect for the actors that do the comercials for these companies. Banks and morgage co. can be used for good reasons, but don't ever think your interest will come before their's. You can get good deal if you use your head and read every thing they put in front of you. If you think they won't take your home from you , your wrong .Look at the ARM loans that they told people that were good for them when they bought homes. They talked people into these loans knowing that in the long run that they would go up to a much higher rate. Not only that they made 100% loan with out a down payment and charge PMI (INS. TO COVER THE DOWN PAYMENT). If you are thinking of getting a reverse morgage, let a person with a little investment knowledge read it and give you some advise.Not the people that are making the loaqn to you. Even consider going to a local credit union, they are owned by the member. They don't have to have the prophet margin. They most likely won't let you do something that won't be in your best interest.
the warning on a reverse mortgage is that typically folks get a lot less then they thought...
a senior would have far more simply selling the house if thats an option.
then there is the fact that many of those un-ethical mortgage brokers from
the real estate debacle found a new career prying on seniors with one of the most complicated of all products out there the reverse mortgages.
right now we have many many reverse mortgages being offered that contain fine print where you agree to equity appreciation sharing. it means if the value of the house rises over time when its sold they not only got the fees and interest but they share in future appreciation too....... we have a case here in ny where a woman died shortly after taking 78,000 in reverse mortgage payments and fees and the lender wants 200,000 as it had the equity sharing clause.
to bolster and provide a higher lifetime income seniors have been talked into taking the payments from the reverse mortgage and rolling them into another high fee product the annuity.
its a mine field of business waiting to grab a seniors cash and anyone taking one better have an attorney read all the fine print.
yes your all right the product itself has good intentions but its the brokers and bankers that have turned it into a goldmine prying on those who are most vulnerable, our seniors
I'm a mortgage broker but before I was a broker, I helped a woman who worked obtain one. She was 80, actually a perfect age for a reverse (the older you are, the better).
This was 1998 so some things have changed but she could no longer afford her payment but had equity. It was a perfect setup - her son had to sign off that he knew she was getting a reverse and there'd be nothing left for him most likely, property would revert to the bank. All was well; she continued to pay her taxes and insurance yearly. It gave her peace of mind and left her stay in her lovely, first floor condo right on a lake.
Well, she passed away in 2005 - she was 88. Her son called the mortgage lender and said, what do I do with the condo? They told him - put it up for sale - they did, got $225K - she owed $91K (original amount $60K) - he was unexpectedly thrilled! So, for her, it was a great thing - there are costs but it let have some financial relief.
(She took care of my children - they were getting older so I had to decrease what I paid her - I still paid her a good sum but instead of working for me all day, she came in at 10 and left at 3:30) - and that was at age 80. (We still miss her!)
To the OP - Wells Fargo offers a good reverse program. I would not be afraid of it.
If you are a retired Senior , and want to buy a second home, now , while the prices are low , whats wrong with a reverse mortgage? Its doubtful that most retired couples could qualify for a conventional mortgage due to the lack of income..... Its possible , that your quality of life could improve along with your net worth...as the values of the second homes comes back up.
Seems to me , a lot of the negative regarding reverse mortages comes from younger relatives? If you have no kids, and need to improve your home for axcess, repairs, buy a Condo in a warm place ....why not do it...we never know when its too late, as we age ether.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Reverse mortgage
