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the fees are so high on the reverse mortgage that if you need to take a reverse mortgage for another home you really cant afford to do it. we could be talking 25,000 in fees on a 200,000 loan.. you also may not get enough to buy another home as they may only loan you up to 1/2 your homes value or less
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.
You mean buy a condo and KEEP the first home---and do what with it?
There's capital gains in many states, to avoid it you have to have lived in the house you're selling (when you do sell the first home) for at least 2 or 3 of the past five years.
You mean buy a condo and KEEP the first home---and do what with it?
There's capital gains in many states, to avoid it you have to have lived in the house you're selling (when you do sell the first home) for at least 2 or 3 of the past five years.
Who said anything about selling.....untill the value doubles of the forclosed condo or vacation hole you bought with the RM.
Who said anything about selling.....untill the value doubles of the forclosed condo or vacation hole you bought with the RM.
The rules of the reverse mortgage would require you to continue to live in the first home; the minute you move out of it the mortgage becomes due. Trying to hide the fact that you have moved out would constitute fraud.
The danger I see in the proposed stategy (getting a reverse mortgage and using the proceeds to buy your retirement condo, which would then appreciate as you are waiting for the original home to also appreciate so you can sell it) is that common wisdom right now is forecasting a long period of stagnant real estate prices. What will you do if nothing appreciates? You would be left holding the bag and would be worse off than before because of the large fees associated with the reverse mortgage.
The rules of the reverse mortgage would require you to continue to live in the first home; the minute you move out of it the mortgage becomes due. Trying to hide the fact that you have moved out would constitute fraud.
The danger I see in the proposed stategy (getting a reverse mortgage and using the proceeds to buy your retirement condo, which would then appreciate as you are waiting for the original home to also appreciate so you can sell it) is that common wisdom right now is forecasting a long period of stagnant real estate prices. What will you do if nothing appreciates? You would be left holding the bag and would be worse off than before because of the large fees associated with the reverse mortgage.
Ok , maybe true , lookig at todays market., but , I was always told , buy low , sell high , and use other peoples money, never your own.
The rental income pays the way, plus a profit , you make no payments , and , at some point , the housing values will come back, I am sure of it.
To insure the best you can , you search wisely for that second home, treat it as an investment , and not just a fun place in paradise...which it could also be...or not.
Ok , maybe true , lookig at todays market., but , I was always told , buy low , sell high , and use other peoples money, never your own.
The rental income pays the way, plus a profit , you make no payments , and , at some point , the housing values will come back, I am sure of it.
To insure the best you can , you search wisely for that second home, treat it as an investment , and not just a fun place in paradise...which it could also be...or not.
The bottom line is that the real estate market as a whole is in a buy low position. Historic low cost for mortgages, and housing prices back before the bubble. If you choose in areas that cannot do anything but grow, ie, rural areas not too far from metro areas, and no on a highway, and heated with solar and renewable fuels, you will have a deal which will appreciate. Buying land in dead areas which are unlikely to have anyone want to move there, is akin to buying high.
Well run REIT's are also a good way to get into this buy low scenario.
But in the buy low time, the herd is not interested in this area, so you have to buy things that the herd doesn't want. Investing is not for people who like to stay in the herd. These afre the buy high, sell low people.
The situation is not as clear as you make it out to be.
Quote:
Originally Posted by Zarathu
The bottom line is that the real estate market as a whole is in a buy low position. Historic low cost for mortgages, and housing prices back before the bubble. If you choose in areas that cannot do anything but grow, ie, rural areas not too far from metro areas, and no on a highway, and heated with solar and renewable fuels, you will have a deal which will appreciate. Buying land in dead areas which are unlikely to have anyone want to move there, is akin to buying high.
Well run REIT's are also a good way to get into this buy low scenario.
But in the buy low time, the herd is not interested in this area, so you have to buy things that the herd doesn't want. Investing is not for people who like to stay in the herd. These afre the buy high, sell low people.
We cannot even assume that the current low real estate prices represent a "bottom" to the market. They may or they may not. There is an enormous and very worrisome quantity of distressed housing out there. That means houses on which the payments are delinquent and the current market value is less that the balance owed. The lenders have held off on foreclosing on all of this because there were already so many foreclosures. All this represents potential downward pressure on prices. We may see further declines.
We cannot even assume that the current low real estate prices represent a "bottom" to the market. They may or they may not. There is an enormous and very worrisome quantity of distressed housing out there. That means houses on which the payments are delinquent and the current market value is less that the balance owed. The lenders have held off on foreclosing on all of this because there were already so many foreclosures. All this represents potential downward pressure on prices. We may see further declines.
And we may not. Everyday there are more and more people looking for housing. At some point all the good stuff will be bought up, causing existing prices to go up , and new builds to start again.... There are some houses that are never going to improve, they need to be sold or demolished for what they are...Land value only.
And we may not. Everyday there are more and more people looking for housing. At some point all the good stuff will be bought up, causing existing prices to go up , and new builds to start again.... There are some houses that are never going to improve, they need to be sold or demolished for what they are...Land value only.
You are certainly right that I have no crystal ball. But I think you misunderstood what I meant by "distressed housing". I was not referring to houses which are in poor physical condition because they are old and/or have not been maintained. I was referring to the financial distress of the homeowners who are behind on payments and cannot sell their homes for what they still owe. The banks are going to have to continue to deal with that large inventory that has not yet been dealt with; they will do this by short sales and foreclosures, which will continue to put downward pressure on prices. In other words, there is a tendancy to think that after all this pain of people losing their homes and the free-fall of prices, that the bottom has been reached and that we will "recover" now. I just do not think this is so, for the reasons given.
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A dangerous game
