(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
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.
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....
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.
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.
I think I am a little late to the party, but...
Could a family member set up a Reverse Mortgage as a way of avoiding any Taxes at Death of parent?
A reverse mortgage is another con-man with a hand in your pocket.