Pros and Cons of Reverse Mortgage.

[BC1969]

Found this and thought I'd share it.
Plus I'm filling a void of a MIA news poster.


Pros and Cons of Reverse Mortgage

Pros of Reverse Mortgages
Allows the homeowner to stay in the home.
Can pay off existing mortgages on the home.
Simple to qualify for because no minimum credit score and generally no income requirements.
No monthly mortgage payments are due for as long as the homeowner lives in the home and meets eligibility requirements for maintenance and paying property taxes and insurance.
The homeowner receives payments on flexible terms:
Credit line for emergencies
Monthly payments
Lump sum distribution
Any combination of the above
A reverse mortgage can not get “upside down” so the heirs will never be personally liable for more than the home is sold for.
Heirs inherit the home and keep any remaining equity after the balance of the reverse mortgage is paid off.
Loan proceeds are not taxable.
The interest rate may be lower than traditional mortgages and home equity loans.


Reverse Mortgage Cons
The fees on a reverse mortgage are the same as a traditional FHA mortgage but are higher than a conventional mortgage because of the insurance cost. The largest costs are:
FHA mortgage insurance
Origination fee
The loan balance gets larger over time and the value of the estate/inheritance may decrease over time.
Although Social Security and Medicare are not affected, Medicaid and other need-based government assistance
can be affected if too much funds are withdrawn (and not spent) in one month.
The program is not well understood by most individuals. However, the availability of independent reverse mortgage counseling helps.

 

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[Peyton Manning]

dave ramsey says bad bad bad

 

[jamey]

i would think that if you had a house paid for,you would want to keep it that way.

 

[Peyton Manning]

ding ding, we have a winner!

 

[BC1969]

Don't know, just felt like posting different stuff, since the ground is frozen and I can't detect..keeps me occupied.

Mike

 

[Chadeaux]

It is a government backed scam to remove private property from the private sector. Nothing more, nothing less.

 

[BC1969]

It is a government backed scam to remove private property from the private sector. Nothing more, nothing less.

I didn't know that, is speculation or based in fact ? If so please pm me the info so I can tell my mother to not do it.

Mike

 

[Treasure_Hunter]

I had uncle that used reverse mortgage as he was running out of money and his SS was not enough. It paid him a monthly income through the remainder of his life and allowed him to live out his life in his home.....It worked very well for him

Please keep politics out of it...

 

[BC1969]

That's what info I was hoping for TH, thank you.

Mike

 

[jamey]

if i was my only family,at times i feel as though i am,that would be great.id sell and move on though personaly.

 

[Chadeaux]

I had uncle that used reverse mortgage as he was running out of money and his SS was not enough. It paid him a monthly income through the remainder of his life and allowed him to live out his life in his home.....It worked very well for him

Please keep politics out of it...

No problem, I'll just not mention who is doing the financing and clarify my statement while I'm at it:

It is simply a scam to remove private property from family ownership. We can't allow property to remain within families for generations.

 

[Treasure_Hunter]

No problem, I'll just not mention who is doing the financing and clarify my statement while I'm at it:

It is simply a scam to remove private property from family ownership. We can't allow property to remain within families for generations.

No one forces a homeowner to do a reverse mortgage, it is simply a way for some people to tap the equity in their home to live out the twilight of their lives in a little more comfort... As I stated it work fine my uncle and neither of his 2 kids objected.

 

[snakeyes]

I had a friend that was thinking about a reverse mortgage, till he read the fine print. He said they made it sound as if he were a renter, except taxes and insurance were his responsibility. Any repairs or work done on the house would need the OK from the lender, also they would do annual inspections.

 

[Jim in Idaho]

I think in the case of both reverse mortgages, and annuities, the worst time to do them is when interest rates are low. One reason there has been renewed talk of RM's recently is because interest rates are really low...that favors the company financing the reverse mortgage.
Jim

 

[davest]

I'm with Chadeaux on this one. The only reason most people do it is because their pensions got tossed and their wages were too low to save any money.

Ever notice that most of these scams that take money form the worker bees originated in the mid 80s?

How are those interest rates on CDs and savings going lately?

 

[BC1969]

Some very interesting replies to this, now I'm glad I posted it, get some better facts.

Mike

 

[StoneDogg1]

Here's the way i look at it...

I have a mediocre home in a bad neighborhood where I am liked (safe haven for folks in need). Life (though having a well paying job) has stepped in and dictated that I can only afford to stay here (wife's medial bills, paying kid's college, etc...), rather than move. I'm content in my home. My kid will not want it (& if he did, I'd talk him into a better place). My wife (to my sorrow) will probably pass before me. I'm saving for retirement - to live well & still have enough to help others in need - and have 20 more years to continue saving. Why not get "free money" while I'm alive & retired and remove the (home) estate burden from my son? The reverse mortgage is a nice option for me. Maybe not so much for others.

Luckily, God has provided for all of my needs and given me the ability to help others as well. The RM is just another little option for me later in life.

 

[Chadeaux]

No one forces a homeowner to do a reverse mortgage, it is simply a way for some people to tap the equity in their home to live out the twilight of their lives in a little more comfort... As I stated it work fine my uncle and neither of his 2 kids objected.

TH, I didn't say there is never a case where it can help.

What I said is that it is a scam designed to remove property from private ownership.

 

[VERMONTPACKRAT]

My dad probably would have lost his home if not for the reverse mortgage. His situation was caused by bad choices and kinda getting scamed by a so-called friend. With out typing a four page response, I think that the reverse mortgage can be a good thing in certain situations.

VPR

 

[Treasure_Hunter]

Here's the way i look at it...

I have a mediocre home in a bad neighborhood where I am liked (safe haven for folks in need). Life (though having a well paying job) has stepped in and dictated that I can only afford to stay here (wife's medial bills, paying kid's college, etc...), rather than move. I'm content in my home. My kid will not want it (& if he did, I'd talk him into a better place). My wife (to my sorrow) will probably pass before me. I'm saving for retirement - to live well & still have enough to help others in need - and have 20 more years to continue saving. Why not get "free money" while I'm alive & retired and remove the (home) estate burden from my son? The reverse mortgage is a nice option for me. Maybe not so much for others.

Luckily, God has provided for all of my needs and given me the ability to help others as well. The RM is just another little option for me later in life.

Like I said it worked for my uncle, it is not something I personally would use just like I would never use a variable interest loan to buy a home, but it works for some people, especially older folks who want to remain in their home and do not have enough income coming in to live on comfortably. My uncle out lived his savings, he refused more help from his kids and extended family.

He got $800 and some odd dollars a month till he passed, his estate got a lump sum when he passed after the loan, interest and fees were paid on sale of the home.

Reverse mortgages are repaid in several different ways. In addition to the estate of the deceased, heirs to the reverse mortgaged home can also repay the loan in full if they wish and keep the home, reverse mortgage lenders often give heirs from three to 12 months to repay the loan.

If neither the heirs nor the estate repay the loan, the lender typically repossesses the home sales it and settles the loan, funds left over after loan is settled goes to the heirs or the estate.