Reverse Mortgages - Page 7

lizzief · ‎09-27-2011

On 9/14/2014 happy housewife said:
On 9/14/2014 lizzief said:
On 9/14/2014 HonnyBrown said:
On 9/14/2014 HonnyBrown said:
Why are there loans involved? I was under the impression that a RM was when a homeowner turned over the title to their house and received payments from the bank.

Anyone?

It's a reverse MORTGAGE., secured by the equity in your home. so you don't have to qualify with income, etc. You still own your home but you receive payments from the bank instead of paying them. But when you sell the home, like any other mortgage, it has to be paid off, and if you don't have the cash to make up the difference, you are in default. There are many misconceptions about reverse mortgages because all you hear in the commercials are the benefits. Judging by some of the good questions here, anyone thinking about it should consult an unbiased professional who is working in your best interests and knows your complete financial situation and estate plan.

I don't understand the concept of selling the house that has a reverse mortgage. Of course the mortgage co has a huge lien against the home and would need to be repaid with the proceeds of the house. As I understand it - when you take out this type of mortgage you do so under the understanding that you are going to stay in the home until you either die or are no longer able to live there, at which time the home becomes the property of the lender for them to dispose of. I am trying to figure out why a person would believe they could sell a home they had a reverse mortgage on without having to repay it.Of course it would have to be repaid.

Boy, do I hate when you type a lengthy response, and for some reason it doesn't post! Let me try again. You raise two misconceptions. First, people don't always stay, they get tired of upkeep, paying taxes, insurance, etc., want to downsize, be near kids,whatever, plans change. So they go to sell the house and surprise, there is no equity! Second, a reverse mortgage is not an endless cash flow. But the sales pitch is "as long as you own your home." Yea, right, OR until the equity runs out, you have nothing, and they want you to pay it back. They count on people passing away before the equity runs out, but with people living longer, but it doesn't always happen that way.

tracytracy · ‎09-12-2011

The bank uses actuarial tables to predict how long you might live. No need to worry about ever having to make a payment as long as you occupy the home....the risk is taken on by the bank. You are free to sell the home at any time too...but you would need to payoff the loan with the proceeds. If you have no heirs or are not concerned about leaving the home to heirs it is an option to consider if you need income.

DiAnne · ‎09-22-2010

On 9/14/2014 lizzief said:
On 9/14/2014 happy housewife said:
On 9/14/2014 lizzief said:
On 9/14/2014 HonnyBrown said:
On 9/14/2014 HonnyBrown said:
Why are there loans involved? I was under the impression that a RM was when a homeowner turned over the title to their house and received payments from the bank.

Anyone?

It's a reverse MORTGAGE., secured by the equity in your home. so you don't have to qualify with income, etc. You still own your home but you receive payments from the bank instead of paying them. But when you sell the home, like any other mortgage, it has to be paid off, and if you don't have the cash to make up the difference, you are in default. There are many misconceptions about reverse mortgages because all you hear in the commercials are the benefits. Judging by some of the good questions here, anyone thinking about it should consult an unbiased professional who is working in your best interests and knows your complete financial situation and estate plan.

I don't understand the concept of selling the house that has a reverse mortgage. Of course the mortgage co has a huge lien against the home and would need to be repaid with the proceeds of the house. As I understand it - when you take out this type of mortgage you do so under the understanding that you are going to stay in the home until you either die or are no longer able to live there, at which time the home becomes the property of the lender for them to dispose of. I am trying to figure out why a person would believe they could sell a home they had a reverse mortgage on without having to repay it.Of course it would have to be repaid.

Boy, do I hate when you type a lengthy response, and for some reason it doesn't post! Let me try again. You raise two misconceptions. First, people don't always stay, they get tired of upkeep, paying taxes, insurance, etc., want to downsize, be near kids,whatever, plans change. So they go to sell the house and surprise, there is no equity! Second, a reverse mortgage is not an endless cash flow. But the sales pitch is "as long as you own your home." Yea, right, OR until the equity runs out, you have nothing, and they want you to pay it back. They count on people passing away before the equity runs out, but with people living longer, but it doesn't always happen that way.

I think they account for the age of the person at the time they acquire the loan. Also if you have a house that is not worth much it would not be worth the fees you have to pay to get the loan so I guess it just depends on the circumstances. I would think anyone who takes out a reverse mortgage would know they were using up the equity of their house so there should not be any surprise. I am not sure what happens if you take monthly payments and they run out of equity. Maybe the monthly payments just stop at that point if that is option you chose.

kahootz · ‎03-11-2010

On 9/14/2014 lizzief said: No, no and no. I am a real estate paralegal and have done closings for people who have reverse mortgages. The bottom line is that you have to pay off what you have borrowed. They don't mention that in the commercials! Several people had to bring money to closing to be able to sell their homes. I think if there is anything we all learned from the financial crisis is that people shouldn't use their homes as a bank. That means no home equity loans and no reverse mortgages. If you need money and have that much equity, sell the house, put the money in the bank, and find a small apartment or retirement community to rent. You don't need the extra expenses to maintain a house and pay property taxes anyway.

Good advice in my opinion!

goodstuff · ‎03-09-2010

It can be a loan of last resort if elders are in financial trouble and have equity in their homes. But they should consider all options carefully before considering this one. These loans do involve high fees and have to be paid back when the homeowner dies or vacates the home or when the home is sold.

AARP.org has some helpful info on their website.

151949 · ‎03-09-2010

On 9/14/2014 lizzief said:
On 9/14/2014 happy housewife said:
On 9/14/2014 lizzief said:
On 9/14/2014 HonnyBrown said:
On 9/14/2014 HonnyBrown said:
Why are there loans involved? I was under the impression that a RM was when a homeowner turned over the title to their house and received payments from the bank.

Anyone?

It's a reverse MORTGAGE., secured by the equity in your home. so you don't have to qualify with income, etc. You still own your home but you receive payments from the bank instead of paying them. But when you sell the home, like any other mortgage, it has to be paid off, and if you don't have the cash to make up the difference, you are in default. There are many misconceptions about reverse mortgages because all you hear in the commercials are the benefits. Judging by some of the good questions here, anyone thinking about it should consult an unbiased professional who is working in your best interests and knows your complete financial situation and estate plan.

I don't understand the concept of selling the house that has a reverse mortgage. Of course the mortgage co has a huge lien against the home and would need to be repaid with the proceeds of the house. As I understand it - when you take out this type of mortgage you do so under the understanding that you are going to stay in the home until you either die or are no longer able to live there, at which time the home becomes the property of the lender for them to dispose of. I am trying to figure out why a person would believe they could sell a home they had a reverse mortgage on without having to repay it.Of course it would have to be repaid.

Boy, do I hate when you type a lengthy response, and for some reason it doesn't post! Let me try again. You raise two misconceptions. First, people don't always stay, they get tired of upkeep, paying taxes, insurance, etc., want to downsize, be near kids,whatever, plans change. So they go to sell the house and surprise, there is no equity! Second, a reverse mortgage is not an endless cash flow. But the sales pitch is "as long as you own your home." Yea, right, OR until the equity runs out, you have nothing, and they want you to pay it back. They count on people passing away before the equity runs out, but with people living longer, but it doesn't always happen that way.

Yes, you can only get income up to a certain amount of money, but they do predict how long they expect you to live and then they base the monthly payout bases on that. The younger you would be when starting the less you would be able to get. Plus homes do increase in value as years go on most of the time, so the equity does go up. I would think a normal 3 bed 2 bath home in good condition - if you were say 85 would most likely have enough equity to suppot you for the rest of your life.

I am not saying that a RM is the best or the right option for everyone in every circumstance but I also think that there are many cases where it is the best option.

For instance , many here are saying get a home equity loan. The problem is - if you need money to live on because your income is not high enough - you would now be taking on making a monthly home equity loan payment. In a RM the money comes to you - and you don't have to pay anything back unless for some reason you decide to sell.

rehoda · ‎11-09-2010

On 9/14/2014 Nightowlz said:
Suze Orman has some info. about the risks & rewards on her site that may help. We don't have a reverse mortgage & don't know anyone that does so don't know much about them. http://www.csmonitor.com/Business/2011/0309/Suze-Orman-Know-the-risks-rewards-of-reverse-mortgages

Her info. sends you to Hud.gov site but the link did not work. Here is the link to it. There is a link here to find lenders by state & counselors for reverse mortgages.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome

She also has a calculator at the 1st link at the bottom of the article to see how much you would receive, interest etc.

in the last pbs suzy special, she said do not do it. if you need the money, sell the property & rent. she said you would to better off - there many hidden costs

lizzief · ‎09-27-2011

On 9/14/2014 DiAnne said:
On 9/14/2014 lizzief said:
On 9/14/2014 happy housewife said:
On 9/14/2014 lizzief said:
On 9/14/2014 HonnyBrown said:
On 9/14/2014 HonnyBrown said:
Why are there loans involved? I was under the impression that a RM was when a homeowner turned over the title to their house and received payments from the bank.

Anyone?

It's a reverse MORTGAGE., secured by the equity in your home. so you don't have to qualify with income, etc. You still own your home but you receive payments from the bank instead of paying them. But when you sell the home, like any other mortgage, it has to be paid off, and if you don't have the cash to make up the difference, you are in default. There are many misconceptions about reverse mortgages because all you hear in the commercials are the benefits. Judging by some of the good questions here, anyone thinking about it should consult an unbiased professional who is working in your best interests and knows your complete financial situation and estate plan.

I don't understand the concept of selling the house that has a reverse mortgage. Of course the mortgage co has a huge lien against the home and would need to be repaid with the proceeds of the house. As I understand it - when you take out this type of mortgage you do so under the understanding that you are going to stay in the home until you either die or are no longer able to live there, at which time the home becomes the property of the lender for them to dispose of. I am trying to figure out why a person would believe they could sell a home they had a reverse mortgage on without having to repay it.Of course it would have to be repaid.

Boy, do I hate when you type a lengthy response, and for some reason it doesn't post! Let me try again. You raise two misconceptions. First, people don't always stay, they get tired of upkeep, paying taxes, insurance, etc., want to downsize, be near kids,whatever, plans change. So they go to sell the house and surprise, there is no equity! Second, a reverse mortgage is not an endless cash flow. But the sales pitch is "as long as you own your home." Yea, right, OR until the equity runs out, you have nothing, and they want you to pay it back. They count on people passing away before the equity runs out, but with people living longer, but it doesn't always happen that way.

I think they account for the age of the person at the time they acquire the loan. Also if you have a house that is not worth much it would not be worth the fees you have to pay to get the loan so I guess it just depends on the circumstances. I would think anyone who takes out a reverse mortgage would know they were using up the equity of their house so there should not be any surprise. I am not sure what happens if you take monthly payments and they run out of equity. Maybe the monthly payments just stop at that point if that is option you chose.

The problem is that people get the sales pitch and don't listen to or read the fine print, so when the payments stop it CAN be a surprise. Then you are left with a house you basically don't own because you owe so much money on it. Kind of like a car lease, you make all those payments and are left with nothing to show for it. After a lifetime of building equity, and working your butt off, I will say one more time: Read the fine print, ask lots of questions, have an unbiased person take a look at it, but please don't use your home as a bank. Downsize if you must, get rid of the house, and leave the headache of homeownership to someone else. Invest that equity safely, and where you can get some kind of income stream if that's what you need. Personally, I'll be glad when I no longer have to pay property taxes, insurance, HOA fees, and there's always something going wrong, right? Just with those items, you save a lot of expense each month, instead of going into more debt.

151949 · ‎03-09-2010

Another thing that has not been mentioned here - a ? I have. say you get a RM and the equity in your home is $200,000 - you select to take a monthly income of let's say $2000. then 5 months down the road you die suddenly. Does the bank take over the house even though you only collected $10,000 of the $200,000 you had in equity or do they only get to keep the amount that equals the fees etc you owe plus the $10,000, and the remainder goes to your estate?

151949 · ‎03-09-2010

On 9/14/2014 lizzief said:
On 9/14/2014 DiAnne said:
On 9/14/2014 lizzief said:
On 9/14/2014 happy housewife said:
On 9/14/2014 lizzief said:
On 9/14/2014 HonnyBrown said:
On 9/14/2014 HonnyBrown said:
Why are there loans involved? I was under the impression that a RM was when a homeowner turned over the title to their house and received payments from the bank.

Anyone?

It's a reverse MORTGAGE., secured by the equity in your home. so you don't have to qualify with income, etc. You still own your home but you receive payments from the bank instead of paying them. But when you sell the home, like any other mortgage, it has to be paid off, and if you don't have the cash to make up the difference, you are in default. There are many misconceptions about reverse mortgages because all you hear in the commercials are the benefits. Judging by some of the good questions here, anyone thinking about it should consult an unbiased professional who is working in your best interests and knows your complete financial situation and estate plan.

I don't understand the concept of selling the house that has a reverse mortgage. Of course the mortgage co has a huge lien against the home and would need to be repaid with the proceeds of the house. As I understand it - when you take out this type of mortgage you do so under the understanding that you are going to stay in the home until you either die or are no longer able to live there, at which time the home becomes the property of the lender for them to dispose of. I am trying to figure out why a person would believe they could sell a home they had a reverse mortgage on without having to repay it.Of course it would have to be repaid.

Boy, do I hate when you type a lengthy response, and for some reason it doesn't post! Let me try again. You raise two misconceptions. First, people don't always stay, they get tired of upkeep, paying taxes, insurance, etc., want to downsize, be near kids,whatever, plans change. So they go to sell the house and surprise, there is no equity! Second, a reverse mortgage is not an endless cash flow. But the sales pitch is "as long as you own your home." Yea, right, OR until the equity runs out, you have nothing, and they want you to pay it back. They count on people passing away before the equity runs out, but with people living longer, but it doesn't always happen that way.

I think they account for the age of the person at the time they acquire the loan. Also if you have a house that is not worth much it would not be worth the fees you have to pay to get the loan so I guess it just depends on the circumstances. I would think anyone who takes out a reverse mortgage would know they were using up the equity of their house so there should not be any surprise. I am not sure what happens if you take monthly payments and they run out of equity. Maybe the monthly payments just stop at that point if that is option you chose.

The problem is that people get the sales pitch and don't listen to or read the fine print, so when the payments stop it CAN be a surprise. Then you are left with a house you basically don't own because you owe so much money on it. Kind of like a car lease, you make all those payments and are left with nothing to show for it. After a lifetime of building equity, and working your butt off, I will say one more time: Read the fine print, ask lots of questions, have an unbiased person take a look at it, but please don't use your home as a bank. Downsize if you must, get rid of the house, and leave the headache of homeownership to someone else. Invest that equity safely, and where you can get some kind of income stream if that's what you need. Personally, I'll be glad when I no longer have to pay property taxes, insurance, HOA fees, and there's always something going wrong, right? Just with those items, you save a lot of expense each month, instead of going into more debt.

Just because YOU do not seem to be at all connected to your home - not everyone feels that way. Not everyone, especially as they age, wants to move somewhere that they are unfamiliar with and start all over.That is very traumatic for old folks.

When a person rents an apartment they ARE paying all the taxes and insurances that everyone else pays - you are simply paying it to the landlord who has passed all that on to you in determining what they will charge for rent.Surely you don't think the landlord is absorbing that cost themself, plus they must make certain they are making a profit as well.