Posted on 10/15/2009 2:05:58 PM PDT by knarf
As I understand it ..
(I'm trying to simplify, here)
If I understand correctly, a lender appraises your home for X amount (say $80,000.00) and starts buying your home from you at an agreed monthly payment.
Is this a correct understanding?
If I'm correct ... you can "break the contract" by buying back what has been paid you (I'm sure with some sort of penalty/fee)
So, if you've aggreed to 80, you recieve 20, then hit the lottery, you pay back the 20 plus whatever penalty, and everything re-sets.
it meanst as soon as you die they take your property and barely give your family time to get your belongings
Yeah ... in THAT case, I’m sure ... I’m asking about if you want to get out of the deal. (assuming you can afford it)
It’s basically an equity loan that you don’t have to pay back. It acts as a lien and would need to be paid back when the house is sold or an estate settled.
If used, it should be for repairs, replacing a roof or something like that. It should not be used to go on vacation.
sory i think only way out is to die
It’s essentially an annuity secured by the house’s equity.
A reverse mortgage really should only be used for living expenses by an elderly person with few other assets. Unless you’re in your mid to late 70s or older and have tapped out all other sources of income, don’t do it.
The closing costs on a reverse mtg are ridiculous. Make sure and consider EVERY option you have before diving into one of these.
1) Say you have a $100K house, and your remaining mortgage is $40K to pay it off. So the amount of cash you can get out of your house is $60K
2) An investor offers to buy your house for $100K and you accept.
3) The investor lets you live in it for $700 per month per your contract with the investor. At that rate, you will dry up your house’s 60K equity in about 7 years.
4) You can keep all the money you would have spent each month for your mortgage.
However:
- The investor enjoys the time-value appreciation of your house over the 7 years.
- The investor will take your $700 per month to help pay off his bank mortage on your former house (his new house).
Dave would love this thread....
as are the interest rates.
I was just thinking yesterday about these reverse mortgages.
They just came about a few years ago right?
Is this another way to get the older peoples money?
Let’s say health care passes (God forbid)and there was
that clause in there about having access to your bank
accounts - would that be a way that they would take these
older people’s money? Whereas before they would not have
had any money available and now they do???
I believe any buyout would either have to be in the contract or mandated by state law. It wouldn't be surprising if this were the case, though.
/8^)
Thanx
My Dad had a reverse mortgage on his home for about 9 years until he died in 2007 - he took a lump sum at first, 30 or 40 grand and then went to monthly installments after that. We had one year after he passed away to repay his debt, which was about 160k - when the house sold, the mortgage company got their money back and we received the balance. He could have received up to a million dollars had he lived long enough - I notice the TV commercials for these loans are not as common as ten years ago.
It 's the equivalent of death by a thousand paper cuts. It's really just a new sham program that some mortgage people came up with to beat old people out of their houses. Check with Dave Ramsey and see what he has to say about reverse mortgages. Your not thinking of doing it are you? You need to get into therapy immediately.
So there was time to sell and (hopefully) realize a profit and keep the house?
I've learned ... never call ANYone.
Yes, we had one year after his death to sell the house and pay off the note or buy it ourselves - we could have financed the balance owed and rolled it into a traditional mortgage.
Fortunately it was worth quite a bit more than the reverse mortgage balance and we had a good realtor, so it all came out pretty well.
Ask him about this...?
Maybe.
Late night dinner cruise?
NO WAY
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