Reverse Mortages

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BevMoore
Posts: 640
Joined: Thu Aug 27, 2015 11:04 pm

Re: Reverse Mortages

Post by BevMoore » Thu May 10, 2018 1:58 pm

If you take out a reverse mortgage and then are unable to live in the house it will go to the mortgage company after a year unless the loan is paid off. That happened with my mom.

Bev

littlemiss63
Posts: 1957
Joined: Thu Aug 27, 2015 10:11 pm
Location: Middle Tennessee

Re: Reverse Mortages

Post by littlemiss63 » Thu May 10, 2018 3:08 pm

BevMoore wrote:
Thu May 10, 2018 1:58 pm
If you take out a reverse mortgage and then are unable to live in the house it will go to the mortgage company after a year unless the loan is paid off. That happened with my mom.

Bev
Bev, since you have actually been involved with a reverse mortgage can you explain more of what really happens in a transaction? I know that the borrowers have to live in it as their prime residence to qualify. Did they pay off the house for your Mom and then want you to pay them back since she couldn't live there?

My friend that did it had a balance on her house, but I thought she said, they paid off the mortgage out of her equity and then she was given the balance to draw on while she was alive. I know she got rid of her house payment somehow and she didn't have the extra money to pay it off. She has passed away and I can't ask her how it was handled. She had no monthly payments and was able to live on her social security and a monthly withdrawal from the Reverse Mortgage.

BevMoore
Posts: 640
Joined: Thu Aug 27, 2015 11:04 pm

Re: Reverse Mortages

Post by BevMoore » Thu May 10, 2018 6:39 pm

I did not live near my mom when she did this but visited her a few times and learned a little about it. In her case the house was paid off but she was not able to make ends meet on her Social Security. I do remember the fees to do this were on the high side, much more then if you just did a HELOCK or refinance. But she felt like this was the best way to go. She was able to get a large sum of money and put it in investment accounts as a way to increase her income. The stipulation was she would be be able to keep the house as long as she lived there or passed away while living there. If she lived elsewhere for a year or more she would either have to pay back the loan, or sell or give back the house.

As it turns out she became very sick and was told she would not be able to live alone. She had already spent over six months in a nursing home so that counted toward the year she was away. Then since no one lived in her area who could care for her I brought her up here to live with me. This all happened during the Great Recession so there is no way the house could be sold for what was owed on it. So the bank took it back.

My brother and his wife have a reverse mortgage on their house near Seattle. Since prices keep going up in that area they pull money out periodically. This is helping with their retirement and they no longer have a house payment. I think the same rules apply that did with my mom. In their case though, if one had to go into assisted living, etc. and the other stayed in the house they keep the house. If both leave then the house either gets paid off or returned to the lender.

I do not intend to take out a reverse mortgage. I am hoping to pay my house off in a few years. If I ever decide to live in a seniors community I will rent the house out to my son or sell it.

Reverse mortgages are expensive and I recommend staying away from them unless you have no other choice and need the extra money to get by. I think some people who don't really need them get them anyway and I don't recommend that.

Bev

littlemiss63
Posts: 1957
Joined: Thu Aug 27, 2015 10:11 pm
Location: Middle Tennessee

Re: Reverse Mortages

Post by littlemiss63 » Thu May 10, 2018 6:57 pm

Bev,

Thank you so much for that insight. I too, hope I never need one either. They make it sound so good on the front, but when you actually get into a deal and something happens that you can't live alone then you can bet they have it set up so they are at an advantage, not the home owner. My house is paid for and I'm like you, I would rent mine out for income before I would go with a Reverse Mortgage.

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Jackielou
Posts: 5519
Joined: Tue Aug 25, 2015 7:51 pm

Re: Reverse Mortages

Post by Jackielou » Thu May 10, 2018 7:07 pm

Thanks for your explanation Bev. It is nice to have someone who had either gone through the process or had someone close to them go through the process explain it all.

alliesmama4
Posts: 3967
Joined: Sun Aug 30, 2015 10:10 pm
Location: Southern IL

Re: Reverse Mortages

Post by alliesmama4 » Fri May 11, 2018 7:59 pm

icfrugal1 wrote:
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
I have a reverse mortgage and it has helped a lot. I have thought of moving and talked to the reverse mortgage lender. My house has gone up considerably in value since I took out the mortgage so if I sell my house I will have enough money to repay the reverse mortgage and enough left to buy another home.. My lender told me that if I do that I can get a new reverse mortgage on my new house.. What it amounts to is you are getting back some of the money you have spent to buy your house. You do not get the full value since you have to have some money that the lender will get back if you exceed the value of your house. I may not have that worded exactly but something along those lines. The thing is there is an interest charge for each month that is applied to your loan but if there is any money left in your account that money also receives interest at the same rate that you are paying.. Also some of the money charged to you goes towards insurance for the lender if you should outlive the value of your house they will get some kind of reimbursement. They cannot make you leave your home. You have to maintain the home as your primary home but you can be gone as long as 2 months at a time. I have no children and most of the family is ok financially so why should I not take advantage of getting some of my own money back instead of leaving my house for someone else to sell and collect money that I can use now. Janet Alliesmama
Janet Alliesmama

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