whats your thoughts on reverse mortgage for senior citizens?

Question : whats your thoughts on reverse mortgage for senior citizens?
My dad thinks he might want one are they really a good idea?
reverse mortgages for seniors

Best answer:

Answer by Sandy S
Do your research. When you find a company you might consider look it up anywhere you can. YES, there are excellent sources and a great deal for seniors who need a little income boost. Then there is the scum. Please be advised there is a lot of scum who spam this site so use greater care here than anywhere else.

If he is looking to pay off credit card or loan debt tell him to forget it and never use the home equity for such uses.

Also in many instances once the homeowner passes away the Reverse Company gets the house.

Do the research and trust no one until you/he reads all the FINE print.

This entry was posted by admin on September 7, 2010 at 2:46 pm, and is filed under Loans and Mortgages. Follow any responses to this post through RSS 2.0.You can leave a response or trackback from your own site.

Comments (5)
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#1 written by SCI C 1 year ago

If you do a online search you will find many companies that specialize in this field. It is a great source of extra funds,credit is not aniisue. Therefore it is all about the house. GUARANTEED MONEY-In this economy,being liquid is King. It is like refinancing without the payment or credit check- WIN-WIN for the Consumer

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#2 written by stan c 1 year ago

If he does not need the funds, don’t do it. As told, the fees are out of this world. I believe it cost about $ 10,000 to $ 12,000 to do it. Let him call Aarp, they should be able to give him a break down on the cost.

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#3 written by Judy 1 year ago

If he has a large amount of equity in his home, but is having trouble paying his monthly expenses, it can be a very good idea. He should check with a couple of banks in his area

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#4 written by Sgt Big Red 1 year ago

My in-laws have recently acquired a reverse mortgage and it is providing them with extra income every month. You can either draw out the whole equity at one time or take it in monthly payments.

Be sure to read all the fine print regarding who ever your father deals with.

An as to “them getting the house” well that is not true.
Here is how it works regarding any heirs:
When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. None of your other assets will be affected by a reverse mortgage loan. This debt will never be passed along to the estate or heirs.

Hope this answer is of help to you
LEGAL DISCLAIMER: The answer provided here is intended for informational purposes only. It is not intended nor presumed to be legal counsel or professional legal advice

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#5 written by Auntie Mame 1 year ago

Good:

You will not have to repay the loan unless you move out.

If the house is worth less than the loan, you give them the home and walk away w/o obligation.

Bad:

You will only get about 60% of the home’s value.

There will be a huge amount of fees and commissions taken out up front. While they say that your heirs could redeem the property, they would have to have enough cash (or get a regular mortgage) to cover the loan balance. Very unlikely that the heirs would want to do this. As such, the company will sell the house and give them any (likely none) cash after deducting the loan amount and (additional) fees and commissions related to selling the home.

While it is true that your estate could pay off the loan (from the sale of other things (e.g. stock)), it is likely that your heirs would likely rather have the cash from these sales rather than another home that they will likely end up just selling as they don’t want/need it. If you have these other assets, why bother with a reverse mortgage and its fees?

You still have to pay for insurance, real estate taxes, and repairs.

Opinion:

In almost all cases, you’d come out money ahead by selling the home, investing the cash and using the interest and/or dividends to pay rent on an apartment or condo.

I can however, think of one case where a reverse mortgage would be great. That would be in states such as Florida and California were the real estate taxes are artificially held low for long term residents. Sometimes this could be thousands dollars per month. In these cases, they might find that this savings in real estate taxes to be so large that it is cheaper to live there than in an apartment or condo.

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