Reverse Mortages

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icfrugal1
Posts: 2167
Joined: Fri Aug 28, 2015 12:54 am

Reverse Mortages

Post by icfrugal1 » Wed May 09, 2018 9:35 pm

https://reversemortgageguides.org

I don't know if this link will work, but I'm sure that all of you have heard of reverse mortgages,

I'm of two minds about them, as much as I love my home, putting debt on it would break my heart, but on the other hand, if it means that you CAN stay in your home, that is worth something.

Years ago I went wit ha friend to a R/M seminar, it was interesting, before that I had no idea of the cost of a R/M upfront there is a % of what you want to borrow, you don't pay that, but the debt starts the moment that you sign the papers, whether or not you take the money at that time. And of course the interest builds until you move out of the house or die.

My friend has a house worth over 1 million !!! But she and her DH had no money to fix the house up and for general living expenses, they got R/M , so now she has a painted house, a new kitchen and a new car. I don't know and I'm not going to ask the details, it does make a kind of sense.

It's easy to say MOVE, but move where? leave your community your DR's your friends. It's nice to not have to leave.

Any thoughts?

IC

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Jackielou
Posts: 4798
Joined: Tue Aug 25, 2015 7:51 pm

Re: Reverse Mortages

Post by Jackielou » Thu May 10, 2018 8:55 am

I don't really think that we would do a reverse mortgage. They kind of scare me.

One spends years paying off a home and I know we think of it as something to either leave for the boys as an inheritance, or to be able to sell and buy a condo when we can no longer look after it.

What happens after you reach the end of your reverse mortgage, or when something happens and you do have to move out. Do the companies involved in the case of reaching the end of your reverse mortgage just kick you out???

floridacatlover
Posts: 2251
Joined: Fri Aug 28, 2015 7:21 am

Re: Reverse Mortages

Post by floridacatlover » Thu May 10, 2018 9:30 am

Jackielou wrote:
Thu May 10, 2018 8:55 am
I don't really think that we would do a reverse mortgage. They kind of scare me.

One spends years paying off a home and I know we think of it as something to either leave for the boys as an inheritance, or to be able to sell and buy a condo when we can no longer look after it.

What happens after you reach the end of your reverse mortgage, or when something happens and you do have to move out. Do the companies involved in the case of reaching the end of your reverse mortgage just kick you out???
People who take reverse mortgages can by law stay in their homes until they die. But they have to pay the homeowners insurance and property insurance or the lender can take the house. There have been cases in my area like this and the judge said he had no choice - these were the terms they signed.

As a single person I would take a reverse mortgage if I was desperate. Not for a new kitchen or to take a vacation but if I really could not pay my bills. (Hopefully this will never happen.)

My mom's cousin took a reverse mortgage when real estate prices were booming here around 2007-2008 and got unbelivably good terms. They valued his house for much more than it was worth. I would not have believed it if I hadn't seen the paperwork. He was someone who was always broke, had to have the latest top-of-the-line gadget. So in his case it worked out because the money lasted until he died.

littlemiss63
Posts: 1728
Joined: Thu Aug 27, 2015 10:11 pm
Location: Middle Tennessee

Re: Reverse Mortages

Post by littlemiss63 » Thu May 10, 2018 11:31 am

The way I understand it is that it's like selling your house, but you still get to live in it until you die with the exception of still paying the taxes,insurance, maintenance and utilities. In other words your equity is yours to use without having to repay it. The company making the Mortgage returns any remaining equity in the home at the death of borrowers to the estate and your heirs can not be saddled with your debt if for some reason the house isn't worth as much money as it was when the agreement was made.

I think it could be a good thing for a senior if they hadn't saved and needed to access their equity without having to make the monthly payments to supplement their monthly income. There is lots of information out there about it and I know several people that have done it and are happy they did. You must be 62 years old to qualify for the program and you must use the house as a primary residence.

floridacatlover
Posts: 2251
Joined: Fri Aug 28, 2015 7:21 am

Re: Reverse Mortages

Post by floridacatlover » Thu May 10, 2018 11:59 am

littlemiss63 wrote:
Thu May 10, 2018 11:31 am
The company making the Mortgage returns any remaining equity in the home at the death of borrowers to the estate and your heirs can not be saddled with your debt if for some reason the house isn't worth as much money as it was when the agreement was made.
Yes, I inherited 50% of mom's cousin's estate. I think he thought he'd outlive mom so he put me instead of her. The other 50% went to his friend. So thankfully we did not have to repay the mortgage company. (My inheritance was $0 because 50% of $0 is $0! I took the family photos.) Mom and I drove by his house, 40-50 miles from our area, a few years after he died and it was still vacant. Kind of sad. I should check now that property is booming again just to see if the mortgage company was able to sell it. It is a very small house. The reverse mortgage really did help him in his final years.

nbeaver
Posts: 98
Joined: Mon Aug 31, 2015 1:49 pm

Re: Reverse Mortages

Post by nbeaver » Thu May 10, 2018 12:45 pm

I generally have a positive impression of reverse mortgages (not that I'm an expert). I hope to not have to have one, because we've got fairly good retirement plans in place. But for seniors who don't have many resources, it seems to me to give them a viable way to remain independent, and there are fairly good protections in place.

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