Any FReepers out there that are savvy about these reverse mortgages? Is this as bad an idea as I think it is?
Depends upon how soon you're planning to die.
It means you can kiss your inheritance good bye, your parents have decided to spend it.
I’m a former mortgage loan officer. From what I understand of these loans, they can sometimes be a benefit for a person over 62. IIRC, the borrower is given a lump sum or annuity, based on age and equity in the home. The senior(s) no longer have to make payments on the house, and the bank cannot take back the house until both seniors (in the case of a couple) have passed away. Borrowers must be counseled by a third party before taking out the loan, which is government regulated.
In a word, yes.
Locally, a retirement age couple used the reverse morgage to free money to purchase “stuff” and an expensive RV.
The husband died. The widow is left with huge debt and no saleable assets. Seems the persons who consider reverse morgages are the same group that look to 2nd/3rd morgages as ATM’s. Just a general observation.
I’m a loan officer for a Mortgage Banking firm. These loans although not for everyone are lifesavers for many Seniors. I have been doing them for about 5 years and have never had a client that has come back and told me that they were sorry for their decision.
More information is available at americashrm.com
Bad idea
IMHO
The hardest part is to find someone you trust to evaluate your situation and tell you the upside and downside honestly.
“Any FReepers out there that are savvy about these reverse mortgages? Is this as bad an idea as I think it is?”
People, who will blow away the reverse mortgage payments they receive, are probably the same people who should never have a credit card nor an equity line of credit.
We are looking very hard at the reverse mortgage option at this time.
What happens to people past 65 if their pensions, ss and IRA/401ks fail or become no longer a support if they can’t make a mortgage payment. They will probably lose their home they have lived in for a long time. Who will take care of them if they lose their homes?
The reverse mortgage is a way get the mortgage paid off if you have still have one or to avoid a credit line takeout if the bottom drops out of our country in the next year or so.
The reverse up front closing costs are high and of course there is no free lunch. A reverse mortgage could eat up whatever value you have in your home and leave nothing for your heirs as the interest accrues over the years.
Our particulair downside is that you are required to take the full amount of the loan formula they calculate in a cash payout or partial cash and a credit line or monthly payments.
Homes in our area haven’t really decreased in value yet, and based on county guidelines for reverse mortgages. We could get a sizeable amount of money. More than we would really want at this time. You supposedly can pay back what you don’t need after you cash out to cut down on the interest costs over the years.
You have options to take the full sum, to go on a monthly repayment schedule or take out a certain amount of cash and have like a credit line if and when you need more.
My wife has a problem not leaving anything for our sons, DIL and grandkids, and she is concerned about losing the tax write off for our mortgage interest payments.
Currently the payments from a reverse mortgage are not taxable. Like so many people, most of our money/cash is in our IRA’s. If we want to give say a $1,000 to our sons or grand children. I have to have $1400 deducted from my IRA. Then, I have FIDO send $300 to the IRS for federal taxes and 100 to the Gobernator for Ca taxes. That is not an issue with the money from the reverse mortgage as at this time the money is not taxable.
We have some widow friends, where the reverse mortgage is paid as a monthly check, may be a life saver for them besides allowing them to stay in their homes until they are carried out toes first.
If Obama takes away the deduction for home mortgage interest, I will get more interested in the reverse mortgage.
My wife, who dislikes and distrusts OBoz0 more than I do, has serious doubts that he would allow millions of seniors to live basically rent free for decades thanks to reverse mortgages.
do not do a reverse mortgage. period.
bad idea.
Watch out for VERY HIGH FEEs !!!
Is this as bad an idea as I think it is?
Not a bad idea if you don’t care about or don’t have anyone who might benefit from inheriting your home or it’s value.
Otherwise your beneficiaries will have to absorb the loan when they inherit the property, a tax on your kids and grandkids. It may be a reverse mortgage but it’s still a loan to be paid back when you die by whoever get’s the property.