Reverse Mortgages

Reverse Mortgages (Full Version)

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pinksugarsub -> Reverse Mortgages (6/12/2008 5:04:35 AM)
For some reason, suddenly reverse mortgages are now heavilly-advertised here. The basic concept is the lender hands over loan proceeds, usually on a monthly basis, but does not receive repayment until the homeowner dies or a similar event occurs. These loans are typically marketed to retirement age people. On the face of it, they're an atractive source of extra income for O/one's retirement years. But they aren't without risks or drawbacks, and i wouldn't recomend A/anyone take out such a loan without first doing a lot of research. http://query.nytimes.com/gst/fullpage.html?res=940ce6d81731f931a15751c1a960958260&sec=&spon=&pagewanted=1 pinksugarsub

SugarMyChurro -> RE: Reverse Mortgages (6/12/2008 5:17:23 AM)
I am admitting to not reading the article. I ask simply this: why not sell the home and live on the resulting capital? You could live on some and reinvest the rest in something more readily fungible for cash. It just sounds like a scam on the face of it.

Hippiekinkster -> RE: Reverse Mortgages (6/12/2008 5:23:31 AM)
quote: ORIGINAL: SugarMyChurro I am admitting to not reading the article. I ask simply this: why not sell the home and live on the resulting capital? You could live on some and reinvest the rest in something more readily fungible for cash. It just sounds like a scam on the face of it. It's not a scam, but it's not a panacea either. Me, I'd strip the equity from the house, lease it out, invest the proceeds, and use depreciation to offset taxes on the investment income. But that's just me.

KatyLied -> RE: Reverse Mortgages (6/12/2008 6:17:19 AM)
Wouldn't a reverse mortgage wreck the equity you've built in your home? I don't know much about them, but isn't that the general premise? Living off the equity and then leaving your heirs the mess of sorting it out at the time of your death?

TahoeSadist -> RE: Reverse Mortgages (6/12/2008 6:22:57 AM)
quote: ORIGINAL: KatyLied Wouldn't a reverse mortgage wreck the equity you've built in your home? I don't know much about them, but isn't that the general premise? Living off the equity and then leaving your heirs the mess of sorting it out at the time of your death? No not quite. The person doing the reverse mortgage doesn't own it, the holder of the rm does, so there is no house for the heirs to inherit. TS

KatyLied -> RE: Reverse Mortgages (6/12/2008 6:24:41 AM)
That's even worse, if you plan on your house as among assets to leave your heirs.

Termyn8or -> RE: Reverse Mortgages (6/12/2008 6:40:22 AM)
They have always been a scam. They are being advertised more now due to the vultures swooping down on what is not clinically defined as a recession. Was it PT Barnum ? There's a sucker born every minute. You can now sell your jewelry through the mail for $$$, but then there's the Jewelry factory "everything is guaranteed to appraise for double". Well there's a simple and easy home business, one would not need a reverse mortgage then right ? You could start with like a $500 ring and work your way up to the Hope diamond in notime. Like stuffing envelopes for $$$. Yeah right, you are going to send me everything you were going to send by direct mail and have me send it out for you. Bullshit. There must be clear explanation of where the money is coming from. In the case of envelope stuffing "Every once in a while the machine gets jammed up and we have to unload it. When that happens we can't restart the batch. It's not just stuffing, you have to stuff the correct personal formletter into the correct preprinted envelope". Even at that I can't see it paying that much. Value given for value recieved. Nobody wants to do that. If you've lived long enough to have paid off a house, why would you need a reverse mortgage now ? To get fucking cable TV or something ? T

Archer -> RE: Reverse Mortgages (6/12/2008 7:38:10 AM)
If you're in the situation where you're going to have to impovrish yourself to qualify for aid to get into a retirement home then it could be a decent idea to instead do the RM. RM's usually have lifetime residency rights. So that even if you outlive the RM being paid in full you still have rights to stay in the home until you die. The RM can be transferable to your estate and thus save your family the trouble of argueing over who gets the house. The estate gets the rest of the RM money and that can be divied out between the heirs. Not saying they are a great idea, but rather saying they can for some folks be a good option . But certainly do research it very well before you do anything like this.

sub4hire -> RE: Reverse Mortgages (6/12/2008 7:41:09 AM)
quote: ORIGINAL: Termyn8or If you've lived long enough to have paid off a house, why would you need a reverse mortgage now ? To get fucking cable TV or something ? T You don't have to have the house paid off. I know a couple who did this. Actually it was just the funeral we went to in California. Anyway...you have to have X amount of equity in your house. You have to be a certain age....I guess the mortgage people won't allow you to do it unless they are going to make out big time in your death. They sure don't want to end up paying you more than your house is worth. Anyway, they viewed it as a way to suppliment social security. Another reason why we should all invest heavily into our IRA's. This is something nobody should ever do.

Termyn8or -> RE: Reverse Mortgages (6/12/2008 8:04:44 AM)
Well I guess that gives new meaning to the phrase "You can't take it with you". Actually if you have no heirs it beats nothing. And if you have heirs, if they have money they should be helping you out. So you wouldn't need a RM. T

BRNaughtyAngel -> RE: Reverse Mortgages (6/12/2008 8:47:23 AM)
Personally, I don't think parents owe it to their kids to leave them anything. If they can, then fine. If not, deal with it. My parents have a reverse mortgage and it was a life saver for them. It is only available to those over the age of I think 62. Say you're 70 years old and own a home outright that is worth $150,000, but you are pretty much poor because you only have your social security, and with all of your bills and stuff, life is a constant struggle between paying the electric bill and buying medication. A reverse mortgage would give you up to 75% (I think that's the amount - it's been awhile since they got theirs) of the equity in your home. So if you owned this house outright, that would be $112,500 that you could receive in a lump sum or in monthly payments. You make no mortgage payments ever again. When you die. your heirs have the choice to sell the house and payoff the mortgage/make profit if possible, or they can just let it go back to the bank. The government protects the mortgage holder by guaranteeing that they don't lose money if the mortgage amount ends up being higher than the actual value of the house once the owner passes away. Now, if you or your parents were hurting for money or just needed some extra, wouldn't you like knowing that this option was available to them? Cuz quite frankly, fuck your kids and their inheritence if it means you suffer while you're alive, just to give them a buck they didn't earn when you're dead. JMHO :)

KatyLied -> RE: Reverse Mortgages (6/12/2008 10:05:16 AM)
Are there huge advantages going reverse mortgage over considering a line of equity or second mortgage? I'm trying to figure out why it would be appealing to turn over your property to a bank. quote: Cuz quite frankly, fuck your kids and their inheritence if it means you suffer while you're alive, just to give them a buck they didn't earn when you're dead. I hope that I can leave my kids with at least a little bit of money at the time of my death. I enjoy providing for my kids, even if it means a sacrifice on my part, for me it's not sacrificial, it's parenting.

pahunkboy -> RE: Reverse Mortgages (6/12/2008 2:35:35 PM)
gasp. someone has equity?? wow.

Termyn8or -> RE: Reverse Mortgages (6/12/2008 4:24:58 PM)
Got 100% equity and IT IS GOING TO STAY THAT WAY. T

CalifChick -> RE: Reverse Mortgages (6/12/2008 5:04:12 PM)
quote: ORIGINAL: KatyLied Are there huge advantages going reverse mortgage over considering a line of equity or second mortgage? I'm trying to figure out why it would be appealing to turn over your property to a bank. A mortgage of any number requires monthly payments, which the elderly may not have. The idea is to have money come in (reverse mortgage), rather than going out (traditional mortgage). A reverse allows the elderly couple to stay in the home that they have been in (maybe for all their married life) instead of selling it and perhaps moving into an apartment (so they could use the proceeds to live on). Cali

Real_Trouble -> RE: Reverse Mortgages (6/12/2008 5:08:38 PM)
The ultimate problem with these products, as usual, is the fees; exorbitant fees are what line the pockets of most in the financial industry. Few are worth it. Certainly nothing of the sort for a product this structurally simple.

pinksugarsub -> RE: Reverse Mortgages (6/12/2008 5:09:45 PM)
BRNaughtyAngel, i was prompted to post the Op because the ad blitz we're seeing here for RM's brought back vague memories of attempts to regulate these lenders in Florida in the '90's. i can't recall the specific nature of the 'scams' being perpetrated, but i do know the bill -- which was defeated -- sought to give one of the state agencies regulatory power over RM lenders. i don't know if things have changed any, in Ohio or Florida or any other state. When i read the article in the link, i inferred it was possible that new federal legislation had given regulatory power to HUD, but that's not clear. IMO, HUD has such an abysmal record that even if it does has regulatory power now, it won't serve to protect borrowers. The article did make clear that RM lenders are 'betting' on an early death of the borrrower. Here's how it works, in simple terms: An RM lender extends a loan of $100,000 to Mr X, age 70. 'Closing costs' are absorbed by the RM lender up front, so Mr X actually receives net proceeds of $90,000. Mr X lives 1 year more and dies. The RM lender collects on the loan, and the 'APR' come close to 100%. pinksugarsub

MmeGigs -> RE: Reverse Mortgages (6/12/2008 5:52:49 PM)
I really, really, REALLY want my step-dad to do this. I know he's struggling some financially, partly because of the kindnesses he offered to my now-deceased addict sister. He's got a lot of property wealth - his house is worth probably 5 times what he bought it for - but little income. When he dies, his assets will be divided between a dozen kids. None of us will see much of a financial bump from this. I'd much rather see him partying his waning years away and having a damned good time than scrimping and suffering to provide me and my siblings and step-siblings with a small windfall when he passes. I just called him and talked with him about this. I hope he considers it. I love the hell out of him, and would like to see him enjoy what he's worked his whole life to attain.

BRNaughtyAngel -> RE: Reverse Mortgages (6/12/2008 6:02:37 PM)
Katy, with a reverse mortgage, there is no monthly payment...... none. With a line of equity or second mortgage, you have a monthly payment. This doesn't help most people who are on seriously fixed income, whereas a reverse mortgage does. And to each his own, but I cannot imagine a child who would want their parent to suffer having to choose between what they can and cannot afford each month in order to live... just so said child could have some money when the parent is gone. My sisters and I are very happy that our parents don't have a house note, and got the equity out of their home. If that means we get little or nothing when they pass away, then so be it. They struggled and sacrificed enough for us when we were children. I certainly don't want them doing it now, when they are in their final years. quote: ORIGINAL: KatyLied Are there huge advantages going reverse mortgage over considering a line of equity or second mortgage? I'm trying to figure out why it would be appealing to turn over your property to a bank. I hope that I can leave my kids with at least a little bit of money at the time of my death. I enjoy providing for my kids, even if it means a sacrifice on my part, for me it's not sacrificial, it's parenting.

popeye1250 -> RE: Reverse Mortgages (6/12/2008 6:11:28 PM)
quote: ORIGINAL: BRNaughtyAngel Personally, I don't think parents owe it to their kids to leave them anything. If they can, then fine. If not, deal with it. My parents have a reverse mortgage and it was a life saver for them. It is only available to those over the age of I think 62. Say you're 70 years old and own a home outright that is worth $150,000, but you are pretty much poor because you only have your social security, and with all of your bills and stuff, life is a constant struggle between paying the electric bill and buying medication. A reverse mortgage would give you up to 75% (I think that's the amount - it's been awhile since they got theirs) of the equity in your home. So if you owned this house outright, that would be $112,500 that you could receive in a lump sum or in monthly payments. You make no mortgage payments ever again. When you die. your heirs have the choice to sell the house and payoff the mortgage/make profit if possible, or they can just let it go back to the bank. The government protects the mortgage holder by guaranteeing that they don't lose money if the mortgage amount ends up being higher than the actual value of the house once the owner passes away. Now, if you or your parents were hurting for money or just needed some extra, wouldn't you like knowing that this option was available to them? Cuz quite frankly, fuck your kids and their inheritence if it means you suffer while you're alive, just to give them a buck they didn't earn when you're dead. JMHO :) Oh nice, so the Taxpayers get screwed again if the value goes down? Talk about having a "sure thing" business for those "mortgage holders." Where's the "risk" for them? How can they lose?

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