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Data Shows Seniors Turning to Reverses to Make Up for Investment Losses (Reverse Mortgages)
Broker Universe ^
| March 25, 2009
| Brad Finkelstein
Posted on 03/25/2009 12:41:39 PM PDT by 2ndDivisionVet
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To: Hardastarboard
Reverse mortgages are not bad for everyone. Fees up front. Limit on amount you can take out. You can take out for a longer period if you have a lot of equity. Heirs do not lose the house, but have to pay the bank the part you took out.
The hardest part is to find someone you trust to evaluate your situation and tell you the upside and downside honestly.
21
posted on
03/25/2009 1:29:43 PM PDT
by
nufsed
(Release the birth certificate, passport and school records.)
To: george76
Bad idea IMHOPlease explain why it's a bad idea, specifics pleasek!
22
posted on
03/25/2009 1:31:02 PM PDT
by
RVN Airplane Driver
("To be born into freedom is an accident; to die in freedom is an obligation..)
To: WestwardHo
Sounds like they took more lump sum to buy toys. Ther fault is not reverse mortgage, it’s that they were impulsive and spent the money on toys.
23
posted on
03/25/2009 1:32:05 PM PDT
by
nufsed
(Release the birth certificate, passport and school records.)
To: GWMcClintock
Uh, no. Could be helful to fixed incomer who wants to stay in the house.
24
posted on
03/25/2009 1:33:28 PM PDT
by
nufsed
(Release the birth certificate, passport and school records.)
To: SoldierDad
Home is not stolen. The max you can borrow is based upon the regulation limits, your equity and the value of the house. When you die the heirs will owe the part the bank paid you. Doesn't mean the bank owns the house. The heirs can pay of the bank and keep the house, refi it, or sell it and split the net proceeds.
The senior taking the mortgage has to decide if they need the money more than they want to leave it behind. They may not have much choice.
Other options, the family supports the person and they stay in the house, no reverse mortgage.
Move to senior facility under medicaid (good luck).
If the individual is capable, they make the decision. Couples generally want to stay in their house. After the death of one, it's a coin toss.
25
posted on
03/25/2009 1:37:32 PM PDT
by
nufsed
(Release the birth certificate, passport and school records.)
To: nufsed
I would add, moving to a senior facility or in with the kids, frees up the house to generate rental income. I’m working with a client on that option now. She has fixed up her house nicely and can’t stand the thought of renters, but she needs to move and wants to pass the house along.
26
posted on
03/25/2009 1:39:28 PM PDT
by
nufsed
(Release the birth certificate, passport and school records.)
To: nufsed
For some people they are an ok last resort. Can’t lose the house because of it while you are alive. With home values falling I wonder how many lenders really want to get involved with them however. Not a big fan of those people that seem to indicate mom and pop should live in poverty with Medicaid just so kids can inherit a house. Most lenders (including Fed backed)have a requirement that both spouses be over 65. Under Texas constitution/law only one has to be over 65 (lender can still require both over 65). So in Texas you could at least technically have a reverse mortgage with one spouse being 90 and the other 18. Could be a long time before lender collects.
To: nomorelurker
Not sure on that. It would seem if the borrower had to be over 64 and died, the debt would be due. I can’t see a loan contract with a 70 year payback.
28
posted on
03/25/2009 1:43:44 PM PDT
by
nufsed
(Release the birth certificate, passport and school records.)
To: nomorelurker
Most lenders (including Fed backed)have a requirement that both spouses be over 65. Under Texas constitution/law only one has to be over 65 (lender can still require both over 65). So in Texas you could at least technically have a reverse mortgage with one spouse being 90 and the other 18. Could be a long time before lender collectsYour post indicates a common problem with Reverse Mortgages. That being...you are long on opinions and short on knowledge. All persons on a RM must be at least 62 and BTW I'm in Texas.
29
posted on
03/25/2009 1:47:23 PM PDT
by
RVN Airplane Driver
("To be born into freedom is an accident; to die in freedom is an obligation..)
To: RVN Airplane Driver
It’s a bad idea because interest rates with a reverse mortgage are about 2 points higher. With a conventional mortgage you will have just as much cash or more even including payments and you maintain total control over your property.
30
posted on
03/25/2009 1:47:48 PM PDT
by
rsobin
To: RVN Airplane Driver
AARP and Countrywide love it. That alone raises questions for me.
Lots of up front fees like an annuity, thus if the old folks move or die soon, these up-front costs / commissions are wasted.
If the folks leave the home soon, there may be other less expensive options to consider, such as home equity loans.
Tough to leave the home to your children, because in many cases, the home is sold to pay back a reverse mortgage.
Many old people will not get detailed financial / legal advice. The folks may not understand what they are signing.
31
posted on
03/25/2009 1:50:26 PM PDT
by
george76
(Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
To: nufsed
Not sure on that. It would seem if the borrower had to be over 64 and died, the debt would be due. I cant see a loan contract with a 70 year payback.After the homeowner moves out of the home for whatever reason the borrower or the estate usually has a year in which to sell the home. Most loans are gov't insured and provide that the homeowner or the estate can never owe more than the home is worth.
32
posted on
03/25/2009 1:51:10 PM PDT
by
RVN Airplane Driver
("To be born into freedom is an accident; to die in freedom is an obligation..)
To: RVN Airplane Driver
The issue was not moving out. It was a couple where one is elderly and the other is very young. Assume the younger one stays in the house.
IMO the loan contract would call the loan when the elderly person died and not wait until the younger one dies.
33
posted on
03/25/2009 1:55:57 PM PDT
by
nufsed
(Release the birth certificate, passport and school records.)
To: E. Pluribus Unum
34
posted on
03/25/2009 1:58:36 PM PDT
by
Hardastarboard
(The Fairness Doctrine isn't about "Fairness" - it's about Doctrine.)
To: RVN Airplane Driver
My bad on the 65. It is 62. I am right on the only one spouse being over 62 (not 65). Go read the Texas Constitution.
To: george76
AARP and Countrywide love it. That alone raises questions for me. Lots of up front fees like an annuity, thus if the old folks move or die soon, these up-front costs / commissions are wasted. If the folks leave the home soon, there may be other less expensive options to consider, such as home equity loans. Tough to leave the home to your children, because in many cases, the home is sold to pay back a reverse mortgage. Many old people will not get detailed financial / legal advice. The folks may not understand what they are signing.You highlight some of the more common misconceptions about RM's. A Reverse Mortgage is probably not a good idea for someone who just needs it for the short term. That being said it is the only option for many because there is no credit requirements. Home equity loans also must have a payment plan...RM's do not. Old people may not get detailed legal advice...the ones I have done business with are savvy. As for AARP liking them...to the best of my knowledge they just state the facts.
36
posted on
03/25/2009 1:59:21 PM PDT
by
RVN Airplane Driver
("To be born into freedom is an accident; to die in freedom is an obligation..)
To: RVN Airplane Driver
If the borrowers receive Medicaid or other public benefits, loan advances may be counted as liquid assets .
The borrower could then lose eligibility if their total liquid assets are too high.
37
posted on
03/25/2009 1:59:35 PM PDT
by
george76
(Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
To: nomorelurker
My bad on the 65. It is 62. I am right on the only one spouse being over 62 (not 65). Go read the Texas Constitution.Why is it I would need to read the Texas Constitution?
38
posted on
03/25/2009 2:01:25 PM PDT
by
RVN Airplane Driver
("To be born into freedom is an accident; to die in freedom is an obligation..)
To: george76
If the borrowers receive Medicaid or other public benefits, loan advances may be counted as liquid assets . The borrower could then lose eligibility if their total liquid assets are too high.That is a highly unlikely circumstance for a RM recipient. BTW if my aunt had gonads she would be my uncle...about the same likelihood as losing medicaid through a RM
39
posted on
03/25/2009 2:06:32 PM PDT
by
RVN Airplane Driver
("To be born into freedom is an accident; to die in freedom is an obligation..)
To: RVN Airplane Driver; Grampa Dave; M. Espinola
There are many benefits and risks to reverse mortgages aka an annuity. Even more than what have been mentioned so far.
Many old people can easily be tricked by clever, fast talking...salesmen.
Some salesmen also kill their sales thru tasteless humor.
40
posted on
03/25/2009 2:16:34 PM PDT
by
george76
(Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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