Reverse Mortgage - Yay or Nay ??

Discussion in 'Money Talk$' started by LadyEagle, Sep 19, 2012.

  1. LadyEagle

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    Has anyone here done a Reverse Mortgage and if so, do you recommend or advise against it? Any experience, good or bad, or any horror stories or successful stories?

    Just wondering how it works and whether or not it is a scam...

    Thanks for your input!
     
  2. billwald

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    NAY! For most old people, their only asset is their house and SS. People with a decent pension or other investments don't need it. A reverse mortgage turns your house into an annuity that only pays while YOU are living in it and paying all taxes, assessments, insurance and utilities.

    What happens if you must go into an assisted facility? What happens if you use up the money to continue a life style you can't afford? Robert Wagner doesn't tell us on his TV commercials.

    It has only been since the dot.com bubble that people began to think of their house as more than the place where you live. Many young people are not buying houses. Most people who lose their house in this depression will never own a house free and clear. The middle class bubble has popped.
     
  3. SaggyWoman

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    I am not sure I believe it is a good idea.
     
  4. Jim1999

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    I never had a mortgage and own several houses. I would never give anyone my house for any amount of cash. This organization does not pay you full value of your house to begin with, and should death visit you early, your estate loses everything.

    I don't think you can beat being mortgage free. Taxes and upkeep are enough financial burden, but usually within your income level. It even took me five tenant to find an honourable tenant. This person has been in the one house for five years now and has no plans on leaving. She treats the property as her own and we leave her be.

    On our demise, these properties are willed to our children or grandchildren. I am happy with this, and we have plenty of cash for our lives from my pensions, savings and watchful spending.

    Cheers,

    Jim
     
  5. billwald

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    >I don't think you can beat being mortgage free.

    For 98% of the population, I agree. The mental/psychological security is well worth any potential loss of net assets. Under the worst possible conditions, in most jurisdictions the county can't take your place for taxes until you are three years behind.

    A house is only the place where you live. If a person was to lease a house and invest the difference between renting and buying he would come out ahead. One reason is the the person who buys a house with a mortgage and rents it out is under different tax rules than the person who buys a house with a mortgage and lives in it.

    This plan requires that the renter has the mental ability to NOT spend the difference on toys and understands how to invest it. When I was making my own investment decisions I lost money.
     
  6. LadyEagle

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    Thanks for your thoughts. Anyone else?

    Does anybody know anyone who has done a reverse mortgage? Especially under the current market where homes have lost value?
     
  7. faithgirl46

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    I don't trust the reverse morgages any further than I can throw them. They sound good but if a personor people has kids and takes a reverese morgage the family home belongs to the reveres morgaeg compay when their folks die
     
  8. billwald

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    Would they be useful for old people who are under water and will lose their house anyway? At least they would be giving themselves some free time and suck out the remaining value of the house.
     
  9. LadyEagle

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    See, bill, that's what I'm thinking. Or if not under water, but lost equity because of the housing market crash, still owe on it, well, what then?
     
  10. billwald

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    Sounds like people who got a reverse mortgage before the crash beat the system.


    from http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.shtm

    Reverse mortgages can use up all or some of the equity in your home, and leave fewer assets for you and your heirs. Most reverse mortgages have a “nonrecourse” clause, which prevents you or your estate from owing more than the value of your home when the loan becomes due and the home is sold. However, if you or your heirs want to retain ownership of the home, you usually must repay the loan in full – even if the loan balance is greater than the value of the home.


    from http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten

    7. How much money can I get from my home?

    The amount you may borrower will depend on:

    Age of the youngest borrower
    Current interest rate
    Lesser of appraised value or the HECM FHA mortgage limit of $625,500 or the sales price; and
    Initial Mortgage Insurance Premium--your choices are HECM Standard or HECM SAVER
    You can borrow more with the HECM Standard option. In addition, the more valuable your home is, the older you are, and the lower the interest rate, the more you can borrow. If there is more than one borrower, the age of the youngest borrower is used to determine the amount you can borrow. For an estimate of HECM cash benefits, select the online calculator from the HECM Home Page. Many online reverse mortgage calculators can provide you with an estimate of the amount of funds you can borrow.
     
  11. saturneptune

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    I agree with all the above posts. Everyone is responsible for their own retirement, and we were told years ago Social Security does NOT provide for a full retirement. Many chose not to listen.

    I will say this. If a person is struggling in their late 70s or 80s, I see no harm in it. They will have an easier life for whatever years they have left. In general, it is a bad deal. Why didn't everyone plan for retirement?
     
  12. billwald

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    In the bad olds multiple generations lived in the same house, apartment, or hovel. There was always someone around to keep an eye on Granny. This current depression may, in part, bring back those days.
     
  13. gb93433

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    Reverse mortgages are just like mortgages except in reverse. There are also loan fees to get the loan. I would not recommend them in that a home which is paid for could be sold and the person take the money and rent an apartment for much less.
     
  14. LadyEagle

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    Well, SN, some people did plan for their retirement and lost their shirts when the stock market crashed in 2008. I know of several people who lost untold thousands and were wiped out.

    Some people I know were single parents (women, who don't usually earn as much as men) and it was all they could do to keep food on the table and a roof over their heads and there was a deadbeat dad.

    Some people I know have children who are well off and they do not need to leave their home to their children but their home still has a mortgage and is not near to being paid off.

    Other people I know were married for many years and a divorce divided up the assets (community property) and there was not enough to stash away for a retirement income and not enough years to recoup.

    Other people I know ended up having massive medical bills that wiped out all of their savings they were hoping to have for retirement. Someone else I know had to pay for years of nursing home care for an Alzheimer's disease spouse and that wiped out their retirement savings.

    The point is, life is uncertain, and no matter how people plan or do not plan, stuff happens.

    So, the question remains - is a reverse mortgage overall a good way to go, and has anybody here done one?
     

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