Anybody do a reverse mortgage?

   #1  

whitepower

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Any tips.. Suggestions?

Theres about 100 grand of equity in the house, theres a mortgage of 120,000 house is worth about 220/230,000

I ve read that the reverse mortgage company refinances the orig loan, adding closing fees servicing fees etc to the new loan... But the home owner no longer pays a monthly mortgage.
Then, they give u a check for the equity amount if the owner so desires.

The owner has to keep the insurance and taxes paid and of course has to maintain the house until he/she dies, at which point the title is transfered to the bank that did the rev mortgage.

If the house has negative equity at the point of transfering title, FHA pays the balance to the bank.

This is what i ve read in a pamphlet sent to my dad. Is there anything else i should know?
 
   #2  
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My uncle did one on his house, was all for it at the time.

FFW 2 years and he doesn't even own that house anymore. Maybe that's where the scam is?..... research it.
 
   #4  
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Whats the catch? Avoiding capital gains? Still have to pay the associated costs with ownership.
I would do an amortization base on a sale price and what they are offering. I would bet that this is one of those "Annuity" tricks
to acquire the most expensive asset people own.
 
   #7  

ysr_racer

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I understand there's a LOT of up front costs. What happens if old folks can't make the property taxes, can they sell it and move?
 
   #8  

C. Dolan

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A 120-Year Lease on Life Outlasts Apartment Heir

Andre-Francois Raffray thought he had a great deal 30 years ago: He would pay a 90-year-old woman 2,500 francs (about $500) a month until she died, then move into her grand apartment in a town Vincent van Gogh once roamed.
But this Christmas, Mr. Raffray died at age 77, having laid out the equivalent of more than $184,000 for an apartment he never got to live in.

On the same day, Jeanne Calment, now listed in the Guinness Book of Records as the world's oldest person at 120, dined on foie gras, duck thighs, cheese and chocolate cake at her nursing home near the sought-after apartment in Arles, northwest of Marseilles in the south of France.
She need not worry about losing income. Although the amount Mr. Raffray already paid is more than twice the apartment's current market value, his widow is obligated to keep sending that monthly check. If Mrs. Calment outlives her, too, then the Raffray children and grandchildren will have to pay.
"In life, one sometimes makes bad deals," Mrs. Calment said on her birthday last Feb. 21.
The apartment is currently unoccupied, according to local media.


As mentioned in a Jay Leno monologue: " Nothing gives you the will to live more than screwing over a lawyer. " :biggar:
 
   #9  
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whitepower

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So you guys are saying that what it says on that pamflet is lies? Can they do that to old ppl? I thought there were laws protecting the elders. This is an FHA program. I ask again... What s the catch? What s the scam? Fees up front? They say those are rolled into the new mortgage but the homeowner wont be paying the mortgage.

Looking for some first hand experience, not hearsay
 
   #12  

ZX11 Man

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I don't have many details readily available as to "why" but what I can tell you is that our family owned real estate company handles a lot of foreclosures, probably the most of any realty anywhere around here, and reverse mortgages are probably the highest percentage of our inventory, and the majority of the former owners are still alive. There are many more ways to lose your property than there are ways to benefit from a reverse mortgage. I do the evictions myself with the police. It's a lot easier to toss someone out who hasn't made a payment for 3 years versus some elderly folks who are trying hard to do the right thing and still have no idea how they lost their home. It's disgusting.
 
   #13  

Master-Cylinder

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II could never understand Home Equity Loans or Second Mortgages. But then again, we (wife and I) don't live in a mansion, have $1000.00 phones, or drive $75,000~100,000.00 cars. If you can't afford shit, don't but it.
 
   #15  

BigHock

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II could never understand Home Equity Loans or Second Mortgages. But then again, we (wife and I) don't live in a mansion, have $1000.00 phones, or drive $75,000~100,000.00 cars. If you can't afford shit, don't but it.
Hard to have a xpensive shit, when you are rocking race bikes, that I have no doubt are dripping with ‘A’ kit parts. That shit is ridiculous. Cylinders?? Carbs? Cooling system?

What are Shiavo and I getting? :muttering::turboblew::turboblew::turboblew::turboblew:
 
   #16  
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II could never understand Home Equity Loans or Second Mortgages. But then again, we (wife and I) don't live in a mansion, have $1000.00 phones, or drive $75,000~100,000.00 cars. If you can't afford shit, don't but it.
I remember working with guys in the 1990s that had 3 mortgages... the first one would have been in double digit apr then the subsequent ones on top of that. Also I remember this brainiac coming in all excited about how he saved $xx,000 in interest by switching to a 15yr term from a 30. He said "they gave me $10,000 cash, only charged a few thousand and rolled the fees into the new loan"...lol.
I got him a free mortgage program (not app!!!) and showed him how he flushed moola down the turlet. The look on his face was hilarious. Oh and he stopped talking to me soon after that.
 
   #17  
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Hard to have a xpensive shit, when you are rocking race bikes, that I have no doubt are dripping with ‘A’ kit parts. That shit is ridiculous. Cylinders?? Carbs? Cooling system?

What are Shiavo and I getting? :muttering::turboblew::turboblew::turboblew::turboblew:
all Im saying if the boxes these 2T groms are in arent made of the finest Mahogany... I will burn them to the ground on the spot!!
And look like this doing so...
ysrsBrothah.jpg
 
   #18  

sailUSVI

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Our neighbor did it...and regrets the day she did it. She is 93. One of my sons good friends parents did it, nothing but bad things to say about it. The reasons are many....
 
   #19  

VFR Rider

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II could never understand Home Equity Loans or Second Mortgages. But then again, we (wife and I) don't live in a mansion, have $1000.00 phones, or drive $75,000~100,000.00 cars. If you can't afford shit, don't but it.
Exactly. Friend my age bought way more house than he needed three years ago and pulled money from his 401K in order to have a down payment. He ended up borrowing 420,000 and had to sell when his trophy wife started fucking some black body builder. Sold for just under 400,000. Turned around and bought another house and somehow managed to pay only closing costs and financed 100% on a 200,000 purchase. Then decided he needed a flashy new ride to go along with his new single lifestyle. Could not afford to purchase the car so he leased. Now throwing away money on "renting" a car for two years. Basically he lives at the limits of his income, spending every dime to support his lifestyle. Admits he will be working at least another ten years.

Live within your means so you don't have to work all your life. Or you can participate in conspicuous consumption and imagine that everyone is jealous of your huge house and BMW while they are retired and enjoying life as you go off to work each morning.
 
   #20  
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whitepower

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Well, not sure how that plays a part in what im asking here but...
My old man was curious because on paper it does sound interesting to say the least...
-Stop paying a monthly mortgage
-get a check for the equity
-get to live in the house as long as you re alive
-when u die if there s neg equity nobody in your family has to pay for it

Does sound good no?
You guys are all saying no dont do it but so far im not seeing the actual bad part of it.

Some say you ll find yourself in the street, how so? All that they say is required is to pay the tax and ins.
Obviously maintaining the property, something everyone does. Being forced to live in it until u pass...no problem there, they ve been living in it since 1982, so i doubt they would move anyway.

Other than those issues, having to live in it till death, maintaining and paying the taxes and insurance, which they are doing since day one.. Other than some fees and monthly servicing fees added to the loan (which seems not to affect since there s no monthly nut to pay...)

So... What exactly is the bad part of rev mortg?
 
   #21  
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...

So... What exactly is the bad part of rev mortg?
not to be morbid but take into life expectancy,
cost of maintaining, ins, taxes vs selling and getting a rental apt.They werent created for benevolence. On a more practical plane... there was an old contractor that had one on his home and the guys age & resources were tapped. He was begging to pass a building inspection. Yah an 80yr old guy on the roof trying to DIY by a certain date because insurance was about to drop him.
My aunt sold her house of 55yrs... lots of family memories but the stairs and ysrd work were too much.
 
   #22  
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whitepower

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There s an existing mortgage on the property.
Taxes and insurance are and have been paid all along.
With a rev mortg, they take out the monthly mortgage payment so u re left w ins/taxes.
Saves him $1000 ea month.

Maintenance you need to do regardless unless you can live like Tinny with dog hair rugs and water dripping on your head.

I ask again, give me actual negatives.
I also have rezervations about anything that sounds too good that s why im asking around first.

Selling and getting a rental means u pay a monthly rent

With rev mortg there is no monthly cost other than ins/tax which is a cost that he pays now anyway, on top of the mortgage.

So u dont pay the $1000 mortgage per month, you get the equity that s in ur house and u have to live in it till u re dead.

Where s the bad?
 
   #23  

CID

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Dave Ramsey says:

Not no, but FUCK no... amen

My opinion is like this -- if you think leasing a vehicle is a good financial choice for you, then a reverse mortgage is probably in the same ballpark.
The dead part is where a LOT of people fuck up in the long run on those deals -- they live too long. :lol:
 
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   #24  

Master-Cylinder

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The bad, was that he should have had his house paid off well before retirement age. Having to dish out $1,500 or more a month while on a limited income is a no no.
 
   #25  
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I think a lot of reverse mortgage and HELOC considerations hinge on your age. If you`re mortgage free and in your 60`s, not too concerned about leaving maximum cash for family/ kids etc. either plan could be viable. You might live to 90 or be gone in a number of months, I know of 6 people within 5 to 10 yrs. older than me (62) with Parkinsons, cancer, early dementia and severe arthritis. The reverse plan can give you a pile of cash with no payment until you move or die. The Heloc is similar...interest only payments until you sell the property, here it is about 165 bucks a month on 50 grand. You can also pay principal. The interest rates here are about 2.6% higher for the reverse plan, you also need to calculate your homes value increasing over time, mine has grown by 350K in 20 years. There are a lot of angles to consider with either plan, maybe have a sit down with a financial planner that someone could recommend to you.
 
   #28  

BarryW

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Seems it's nothing more than selling a $220k (market value) house for $100k (equity), with the future obligation of insurance, taxes and maintenance until they're too old to live there. Why not sell it outright and rent something else with the new pocket full of captital gains change? If they can currently swing those obligations on top of a mortgage, surely they'd be better off with an extra $100k and only a rent payment.
 
   #29  
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Seems it's nothing more than selling a $220k (market value) house for $100k (equity), with the future obligation of insurance, taxes and maintenance until they're too old to live there. Why not sell it outright and rent something else with the new pocket full of captital gains change? If they can currently swing those obligations on top of a mortgage, surely they'd be better off with an extra $100k and only a rent payment.
Lots of people become attached to their homes for numerous reasons. I`ve got a 87 yr. old neighbor in that situation, nearly 30 years in her home, husband died 3 years back. She`s moving into a brand new assisted living facility soon, her place is just too much work. It took her 3 years to accept that this is the right decision, even at 3700 a month. As you`ve stated downsizing or renting is always another thing to look at.
 
   #30  

CID

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Seems it's nothing more than selling a $220k (market value) house for $100k (equity), with the future obligation of insurance, taxes and maintenance until they're too old to live there. Why not sell it outright and rent something else with the new pocket full of captital gains change? If they can currently swing those obligations on top of a mortgage, surely they'd be better off with an extra $100k and only a rent payment.
this
 
   #31  
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whitepower

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Seems it's nothing more than selling a $220k (market value) house for $100k (equity), with the future obligation of insurance, taxes and maintenance until they're too old to live there. Why not sell it outright and rent something else with the new pocket full of captital gains change? If they can currently swing those obligations on top of a mortgage, surely they'd be better off with an extra $100k and only a rent payment.
Well isn t reverse mortg $100k and NO rent/monthly payment better?
 
   #32  
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whitepower

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Seems it's nothing more than selling a $220k (market value) house for $100k (equity), with the future obligation of insurance, taxes and maintenance until they're too old to live there. Why not sell it outright and rent something else with the new pocket full of captital gains change? If they can currently swing those obligations on top of a mortgage, surely they'd be better off with an extra $100k and only a rent payment.

They re 80 yrs old. Say they live to 100.
They would have to live there 20 yrs with no monthly payment other than ins/taxes
And they d get 100k at the time of refinance.

If the equity increases over the 20 yrs they can pull it out if they wish
If the equity decreases neither they nor any other family member has to pay. FHA covers the negative equity balance.

So.. Why am i hearing go pay rent and take the money when they can take the money and not pay rent.
 
   #33  

DungBeatle

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They still have to maintain the house. If it were my house, that would not be a good deal...
 
   #34  

CID

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80 seems like a good number to me to do that type of thing, but who maintains the house, that would be a good question. I seriously doubt an 80 year old person would lose their home from not mowing the lawn, but a I could see some catastrophic repair from some disaster might do them in.

80 years old though...?? dammm I'd think about it in that situation. Worst case with no family you could move into the state shithole assisted living house if you ran into the late 90s. :up:
 
   #36  

BarryW

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Well isn t reverse mortg $100k and NO rent/monthly payment better?
If they sell it they get the $100k equity PLUS the $100k of capital gain, correct? So it's more like $180k (after tax) with rent payments vs. $100k with tax/ins/maintenance payments. Around here property tax is an exponentially increasing annual ass-raping of epic proportion, but they do seniors the good favor of capping the value at 65 y.o., so presumably your folks enjoy a similar break.

None of this addresses the sentimental aspects of living in "your" home, which I get, I'm only addressing the financials here. BTW, one of my financial advisory subscriptions says there are situations in which reverse mortgages make sense for seniors, however I don't recall the specifics. I wish your folks the best of fortune with whatever option they choose to pursue.:ducmanic:
 
   #37  

DaCat

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Pay it off and be done with the bullshit schemes. One day, when they do pass away (hopefully many healthy years from now) you end up with an asset, a fixed asset that you can earn income from.
 
   #38  
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I guess now I gotta ask my uncle why he thought this was a good idea. From what I understand his house was paid for when he did this. I actually thought this reverse mortgage was aimed at people that own their homes outright.

I remember when he sold his house it didn't last long, like a week they had a buyer. He was tired of maintenance and lake dues so they bought a condo, probably paid for it in cash too.
 
   #39  

Master-Cylinder

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Pay it off and be done with the bullshit schemes. One day, when they do pass away (hopefully many healthy years from now) you end up with an asset, a fixed asset that you can earn income from.
Now that's a plan.

This Jew bastard I know, not YSR, some other Jew Bastard, owns the houses his parents and his wife's parents live in, he rents the houses to them. Both in the same neighborhood, blocks a part. Makin' bacon off the elders.
 
   #40  

Vegas12

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My understanding, based on my mom looking into the reverse mortgage, is it's based on your age.

The older you are, the more of your equity you receive.

When she looked into it in her 60's she was getting fucked by getting 1/2 (?) her actual equity.

She also mentioned HAVING to be physically in the house. If there's a stint of assisted living, they can take the house.

@ 80, it may make sense since you'll receive most of the equity....but understand that equity will be based on an FHA appraisal....chances are they could sell the house for more depending on the area.

But my personal take on it is fuck sentimental value. The insurance, maintenance and taxes are easily the cost of a rental in most cases.

Just sell the house, pocket the cash and rent a home base and travel your last few years.
 
   #41  

ysr_racer

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Now that's a plan.

This Jew bastard I know, not YSR, some other Jew Bastard, owns the houses his parents and his wife's parents live in, he rents the houses to them. Both in the same neighborhood, blocks a part. Makin' bacon off the elders.
I like him already !!
 
   #42  

maui

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My understanding, based on my mom looking into the reverse mortgage, is it's based on your age.

The older you are, the more of your equity you receive.

When she looked into it in her 60's she was getting fucked by getting 1/2 (?) her actual equity.

She also mentioned HAVING to be physically in the house. If there's a stint of assisted living, they can take the house.

@ 80, it may make sense since you'll receive most of the equity....but understand that equity will be based on an FHA appraisal....chances are they could sell the house for more depending on the area.

But my personal take on it is fuck sentimental value. The insurance, maintenance and taxes are easily the cost of a rental in most cases.

Just sell the house, pocket the cash and rent a home base and travel your last few years.
One of the reasons people are attracted to this is that it is the proverbial get rich quick answer that people want. Like many schemes they have to have a percentage of people for whom this works in their favor to hold up as an example.

If the banks really thought it was a great deal for you, basically, they wouldn't do it. It's a great deal for the bank, thats it. Your assessment of just selling the house is spot on. Most people here don't realize the level of financial understanding you have so they're gonna glance over this.
 
   #43  
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whitepower

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Good info all around.
No BarryW, they owe 120k. House got appraised for close to 230k a couple months ago, my dad was looking to get a line of credit out but doing it the traditional way they were giving him half of the equity he has in it...( Roughly 100k equity) so they were offering 60k.

He can prob get the whole amt if he reverse mortgs
As far as maintenance, the house was completely redone from studs out as i burned part of it down a few years back, by mistake of course. Was building a fat boy in the basement and the gas fumes from whatever little gas was left in the gastank got ignited from the waterheater pilot light.

So the house was built in '82 then again like 90% of it in around 2000.
Needs shit everything is fairly new. Theres no grass just a huge new garage out back and an asphalt driveway.
Hardly any maintenance at all. The neighbor snowblows his driveway trims his bushes...

So i see it like worst case scenario is them wanting to get up and move before dying and leaving the house to the rev mortg bank. In any event, they would have zero equity in the house anyway so... They can either walk away or stay in it
 
   #44  
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whitepower

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$5000 yr taxes plus about $70/ month ins
So like 500 a month, not gonna rent anything aa nice as their house for that

Rents in the area on something comparable is ovee $2000/mo
 
   #45  

ZRX4ME

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my dad had one and my mother in law currently has one. Nothing negative to say at all.
 
   #46  

wormser77

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Am I wrong in thinking you are basically selling your house to some Corp on a zero interest loan to them?
 
   #47  

ZRX4ME

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well, my mother in law became widowed and lost some SS income(they were very poor, but had a nice home). Brother in law got her reverse mortgage and for the last 20 years she has not had to pay mortgage. There was not much equity in house ,so RM was a win for her. My dad was loaded, but reverse mortgage got him $50,000 cash in hand( not too much equity in home) and he died 3 years later anyway. In 4 years im going to do the same and become a 62 year old beach bum.
 
   #48  
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What if you aren't dead but just decide to walk away? A market drop or unforseen equipment failure could actually make it more profitable in the long run.
 
   #49  
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$5000 yr taxes plus about $70/ month ins
So like 500 a month, not gonna rent anything aa nice as their house for that

Rents in the area on something comparable is ovee $2000/mo
where is this mystical $2000/ month rental area? How does a nice house in the same zip code only appraise for $230k ??? Seniors always qualify for reduced rent programs.
Here... new costruction water front apt rents for $1400/ for a 2br. Seniors get 1st fl priority and about 25% off.
 
   #50  
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whitepower

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where is this mystical $2000/ month rental area? How does a nice house in the same zip code only appraise for $230k ??? Seniors always qualify for reduced rent programs.
Here... new costruction water front apt rents for $1400/ for a 2br. Seniors get 1st fl priority and about 25% off.
Dont compare florida prices with fairfield county CT prices.
My father also looked into renting his house and had numerous 2000-2200 offers.
There s a huuge 4 car garage with an upstairs and most of the ones who wanted to rent it were landscapers or ppl with equipment to store

Im sure they can rent something for 1000 a month but it aint gonna be comparable to what they re in now
 
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