Reverse Mortgage

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windjammer

windjammer

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I heard some about a reverse mortgage. I don't know enough to know if it's a good thing for a couple reaching retirement age.

The home is now free and clear, and has been for some time. Anyone have thoughts, pro or con.
 
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I heard some about a reverse mortgage. I don't know enough to know if it's a good thing for a couple reaching retirement age.

The home is now free and clear, and has been for some time. Anyone have thoughts, pro or con.
 
wj:
I seen to remember that it is something like negotiating and receiving a stipulated amount of money, based on the home's value, with the agreement that you may live in it until you can't (based on health or death) and then the home belongs to the lender. I may be all wet with my recall.

Ed
 
In most situations, a reverse mortgage is a bad idea. Depending on your age, they'll likely give you less than half the value of your house. Yes, you get to live in it, but you also have to pay to keep it up and pay taxes on it. Then, when you die, they get the house, not your heirs. Like I said, usually a bad idea. If you think it might be a good idea in your situation, I'd urge you to talk it over with an accountant. They can run the numbers for you.
 
They are going to get your house when you die, even if you still have a lot of equity in it.
Why? They are going to demand an exhorbitant amount from your heirs to buy back the company equity in the house, so the heirs will have to just let it go. Their charges and interest rates are absurdly high.

It's not much removed from fraud and stealing.
Don't be a sucker just because you're old.
 
If you own the house free and clear, and you have no heirs, it *MIGHT* be ok.
If I recall correctly, there's a requirement that you meet with a gov. rep beforehand to go over everything, pro and con.
We have no kids/heirs, and the house is paid for, so it might be ok for us.
 
Please don't do it.
icon_frown.gif
 
There must be different kinds of reverse mortgages. Listen to this one. My best friend in californias mother had one. She only lived about two months on it and recently died. The house is in palm springs. It already had dropped huge in value when she got on the plan last november or december. Probley half to start with. Somehow my buddy paid back a lump to get the house and resell it. The final paperwork I think is today. (He called me yesterday.) Buddy seems okay with the deal under the cirumstances, but it sounds like a huge loss to me! Now had this happened three years ago when the house was worth almost three times as much it would have been a lot more different and sensable.
 
I investigated this at length when the market was normal.

There's only one upside. If you have no other option but to lose the house and be out in the street, then do it. Because no matter how long you live, they'll never take the house until you pass away. You continue to get a payment each month even after the equity in the house is used up. How? The rest of us taxpayers make the payments to you like any other government program.

Otherwise don't do it, there is no other advantage for anyone else. An exorbitant interest rate is charged against the equity each month. Although heirs get the 1st refusal when you die they won't want to pay the price. Now having said that, in today's upside down market, the heirs may get a bargain.
 
It's a far better deal to get a new mortgage on the house, put it in the bank and live off that. Esp. with today mortgage rates. If you get quotes for a reverse mortgage and a straight out mortgage and compare costs it will be very clear.
 
I think that if I'm ever fortunate enough to own a home, free and clear of a mortgage, then that home will be the LAST thing that I put up just to get cash.
 
Every finacial advisor I have ever talked to said "not only no, but hell no!!"
 
A close friend helped his widowed mother do it. She died less than two months later!
 
No! No! No!

Please don't do it! Just short of payday lending/legalized loan sharking! Leverage your equity! Take out a loan for enough of the equity to live on and make the note on the loan from the proceeds for a few years, or even better, negotiate an interest only loan with a balloon repayment at the end! JMHO.
 
I have watched the TV commercials for several years and the actors doing them used to be considered "reputable" folks.

But I am in agreement with every negative comment voiced here. Even if your home is paid off this "reverse mortgage" program just doesn't smell good.

As for the actors...I've lost respect for them (of course I have little respect for most TV and movie actors).
 
Yes, a very Bad Idea-like the home equity loan. My understanding is that at most you get 60-70% of the value/equity, you have to maintain the lace to THEIR standards, I note several of the Big Banks, BofA and Citicorp-have pulled out of the reverse mortgage market. My personal advice is to sell the place and find something more affordable.
 
windjammer,

If the couple doesn't have a cash flow problem, and especially if they own the home free and clear, don't walk, run from the Reverse Mortgage!

As stated in my post #15, there's only one circumstance when the Rev Mort. makes sense. For those in need of cash to pay the bills each month, as recommended by some, refinancing the home ones self or selling and buying into a cheaper home ARE better alternatives IN A NORMAL MARKET!

But with home values upside down and qualification for new mortgages almost impossible for fixed income folks, those are not currently realistic alternatives for an elderly person in a cash flow dilema.

Don't get me wrong, I'm no fan of Reverse Mortgages!! As I said they are a rip off. But they do offer a steady income for a person with no better alternatives until they pass on, no matter what happens to the value of the home.
 
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If you NEED the money it is better than robbing a 7/11 but not much.
 
Son I think that if you are seeking advise for a move like this on a forum that you just joined you ought to step back take a deep breath and think.
This is a cold cruel world and people are out there to take your money. Only you can let them do it. You need to do your homework and get advise from live people you personally know and trust-not from internet sites and forums. If that site you posted is anything like a lot of internet lenders I have come across, they will roll you in fecal matter and dip you in cornflakes.

Please be careful. Read before you sign and do NOT be afraid to ask questions. Get EVERYTHING in writing and I mean EVERYTHING. Most importantly be willing (and have the guts) to walk away if it does not sound right.

Remember these people are in the industry to make money not to help you out. It's up to you to protect yourself.
 
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