Reverse mortgage

[Pat-inCO]

I was just watching a small portion of a spiel on reverse mortgages. WHAT
A PRESENTATION . . . . for "low information" voters. :roll: I can not think
of a reason to pay them interest on equity I have in my home. Yup, you
get cash in hand, that, one way or the other, you have to pay back,
WITH INTEREST. :roll: . :shock: . :roll:

I find it amazing how many of the TV "stars" are now hocking sheer stupidity
to other mentally challenged individuals (read that idiots). Their careers
are down the tubes so they try to find another way to get money without
doing anything productive for it. . . . . . Oh well.

 

[blackhawknj]

I saw a story on Yahoo News some time about reverse mortgages, it cited the case of an elderly widow whose husband left her owing $239,000 on a reverse mortgage. If you want to leave your spouse or heirs nothing, they're a good way to go.

 

[Rick Courtright]

Hi,

It's a loan, folks! True, it's not conventionally structured, but it's a loan nevertheless...

"Free money" is like a free lunch. Ain't no such thing as either. What's so hard to understand about that?

Rick C

 

[Pat-inCO]

I can not think of a reason to pay them interest on equity I have in my home. Yup, you get cash in hand, that, one way or the other, you have to pay back, WITH INTEREST.

"Free money" is like a free lunch. Ain't no such thing as either. What's so hard to understand about that?

Huh?
Did you even read my first post?

 

[Rick Courtright]

Huh?
Did you even read my first post?

Hi,

Pat, do you always argue with folks, even when they're agreeing with you?

Now if you'll pull in your horns for a second or two, yes, I read what you wrote and I understand you've got these things figured out. Yet I've had several clients, supposedly intelligent people, who got into reverse mortgages some years back and honestly thought they were getting something for nothing until after they were all signed up and committed to the deal: these things are poorly explained to the consumer (on purpose?) and even more poorly understood (by people just exhibiting human nature?) And judging by the questions I get frequently, I'd suggest they were far more likely to fit the model of the average consumer than you might. Just sayin'...

Rick C

 

[wizofwas]

I just have to ask because I don't know for sure. Isn't a reverse mortgage the same thing as selling your home for so much a month until you die or leave the property? Then it reverts to the payer at that time? Depending on the situation, it does sound like it could be a good deal. Inquiring minds want to know.

 

[Fox Mike]

There was an article in the Baltimore Sun a couple weeks back explaining the pitfalls of that 'scheme'. What they say is true; you don't have to pay anything as long as YOU own your home. Die and the entire 'loan' can become due all at once. Therein lies the rub. Many will not allow the home to be sold till the loan is paid off, and that is the only way some would be able to pay it off.

 

[Pat-inCO]

Pat, do you always argue with folks, even when they're agreeing with you?

Sorry, I mis understood you.

 

[FastEd]

The RM is a legitimate way to get cash out of the equity on your home. This kind of loan is regulated by the Federal Government.

A little ole lady who is living in her lifetime home, that's paid for, needs money for what ever the reason. She can't mortgage her house again because she has no income other than her S.S.
She does not want to sell her house and move into something else. so she can dip into her equity and does not have to repay the loan until she either sells the house or dies. The Federal Government determines how much she can get. She, also, has to go to school for so many hours so she completely understands how it all works.

The Reverse Mortgage deal is not really new...

 

[tazbigdog]

This happened to my in-laws. House was bought back in the 60'2 for under 20K and after 30 years, they finally paid it off.

Fast forward to today, neither saved any money while working and while retired, they couldn't afford the bills, and the casinos. So they got a reverse and when years later they sold their house, they had to pay back the loan they got and the interest. Their 300K house went majority to the other company. What a waste!

 

[stevemb]

If you plan on leaving your home to someone it is most likely a bad idea. Here, with no children, am keeping an open mind to the option. If you haven't saved anything, and like to gamble,well, you stepped in it your self.

 

[DGW1949]

I checked into in's and out's of the RM thing.
The basics of what I found was:

Both you and your spouse have to be of "retirement age".
It has to be your primary residence and can not be abandoned, leased or rented-out.
The property in question has to be up to FHA standards.
It will be subject to regular inspections to insure that it is kept in good repair (read that as marketable condition).
You only get a certain percentage of it's (FHA) appraised value. Sorry, but I forget what the percentage is.
You have the choice of getting your money in one lump sum or getting it in monthly installments.
The RM contract is good untill you both die. If you die first, your wife still gets to live in the house for free (almost).
You or the surviving spouse are responsable for keeping the yearly taxes paid.
Upon the death of you both, the mortgage holder will claim the property unless it is "willed" to someomeone. In that case, that someone begins making payments with a time limit of 12 months before getting another mortgage to pay it off. If they don't/can't do either (or both), the RM holder (read that as the banksters) will claim it anyway.
Yes, there's accumilated interest to be paid....by someone, at some point.
Yes, If the taxes get behind, the banksters will claim the property.
Yes, despite the smoke 'n morror TV advertising, this is a federal government program.

Hope this helps.

DGW

 

[ronto]

If you have deadbeat heirs...who cares?

 

[ArmedinAZ]

Yes, despite the smoke 'n morror TV advertising, this is a federal government program.

DGW

Are you saying every RM is through a government agency? It looks like there are private RMs available.

From FTC website:
There are three types of reverse mortgages:

single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations
federally-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs) and backed by the U. S. Department of Housing and Urban Development (HUD)
proprietary reverse mortgages, private loans that are backed by the companies that develop them
http://www.consumer.ftc.gov/articles/0192-reverse-mortgages

An elderly friend did an RM a few years ago (before the bust). He died several years later then the payout exceeded the value of the home leaving his widow with no income from the house and no equity. She still has all of the costs of home ownership. Didn't work out so well.

 

[revhigh]

Anybody who thinks money from anywhere is 'free' Is a fool. It's a legitimate way to get equity out of your home ... Of course it's not free, and of course it has to be paid back ... Most likely as reduced proceeds from the heir's sale of the house or through a mortgage taken out on the remaining value of the home plus the equity that was taken out.

It's really not rocket science ... A scam ... Or anything else ... Somebody is simply giving you money in exchange for equity in your home to be paid back by 'someone else in the future ... Whether it be your heirs ... Or a future buyer.

REV

 

[blackhawknj]

It's basically a home equity loan program tailored to sell to the elderly. Like a home equity loan-or a first mortgage, it's simply a secured loan.

 

[DGW1949]

Yes, despite the smoke 'n morror TV advertising, this is a federal government program.

DGW

Are you saying every RM is through a government agency? It looks like there are private RMs available......

..........

No, I'm saying that fed.gov has their hands in it to some extent, regardless of which is picked.
To me, that means that it is just another joint operation being carried out by the same government/bankning cartel which I have come to not-so-effectionently call....."the banksters".

The tell-tale signs are:
The whole sheebang started with fake money (aka debt notes) being loaned which didn't exist untill it was created by the lender the moment that the contract was signed.
Interest being charged on said debt notes over the prievious years.....and in this case, compounded.
Real property (aka wealth) being put at risk as collateral.
More interest being levied on everhow many new debt notes a re-loaned via the new RM.
All the expenses, taxes, up keep etc remain the sole responsability of the poor soul who "borrowed" what should have been his own money back.....except that there aint no "real money", only more debt notes being created.
By law, fed.gov approval is required every step of the way....and....most often, some gov agency or another will be in on the loaning....if not outright, then surely via one of the FED's central banks, or when the "private lender" sells the contract to a central bank....which will probably happen sooner or later, all with gov approval of course.

In other words, they're all in cahoots on this thing, and you can bet that it aint for our benifit.

DGW

 

[mohavesam]

Some people watch too much TV...

Wake up and smell the coffee - follow the money. It takes tens of thousands of dollars to produce any TV commercial. And millions to buy ad time nationwide.
So someone is trying to sell you something that will net them a profit. Get fools to call the "numbers on the screen" and part with their money. Pretty simple concept.

 

[alizard]

I was just watching a small portion of a spiel on reverse mortgages. WHAT
A PRESENTATION . . . . for "low information" voters. :roll: I can not think
of a reason to pay them interest on equity I have in my home. Yup, you
get cash in hand, that, one way or the other, you have to pay back,
WITH INTEREST. :roll: . :shock: . :roll:

I find it amazing how many of the TV "stars" are now hocking sheer stupidity
to other mentally challenged individuals (read that idiots). Their careers
are down the tubes so they try to find another way to get money without
doing anything productive for it. . . . . . Oh well.

It is one of the scams that preys on elderly people. The worst scam is annuities which every disreputable investment broker (I know that is redundant) uses to rip people off. The government issued a warning about annuities but every "wealth management" specialist will try to shoe horn you into them.

 

[Cooperhawk]

You know, here's the thing, you cannot any longer will your property to your children with no strings attached. If you go into a nursing home someone has to pay the cost. Around here it's in excess of $5000.00 a month. I know because my Mom just died a couple years ago and we went through all of this. As long as she had assets those assets had to be used to pay her room and board. We sold her house and applied that money to cover her expenses. With an RM she could have remained in her home til the end of her life, but she had a stroke and needed to be in a home so it was not an option.

You think you'll just gift your property to your children and cheat the state and nursing homes. Nope, there's a lookback of several years to prevent just that. Besides there is a limit on how much you can gift each year.

Any way you look at it the "Death Tax" will get most of your assets unless you start planning early and plan wisely. Then in many instances where the property is placed in the children's names, the children began to pillage the property long before your demise. My wife the Attorney handles quite a lot of these cases.

So in the end the RM can be a valuable tool for elderly folks who wish to remain in their home but couldn't afford it otherwise.

 

[Pal Val]

Easy way to look at things:
During all your life - Debt is BAD, Equity is GOOD.
After retirement - Monthly payments are BAD, Monthly income is GOOD.

The reverse mortgage breaks both those rules. I figure it makes them BAD

 

[Cooperhawk]

Easy way to look at things:
During all your life - Debt is BAD, Equity is GOOD.
After retirement - Monthly payments are BAD, Monthly income is GOOD.

The reverse mortgage breaks both those rules. I figure it makes them BAD

How is that? A RM is not a debt that you pay all your life. It is only a method of acquiring income when you are older and unable to work anymore. Sure the Bankers make money on it, but that's what Bankers do.

Go ahead an sell your house and then pay rent somewhere. How does that put you ahead? Sooner or later the equity is used up either way.

 

[Rancher Will]

I believe Reverse mortgages may be getting bad name unfairly. It just happens that I have been knowlegable about one, that may, or may not be typical.

A few months ago one of my employees benefited from a reverse mortgage that also benefited his wifes' parents.

Her parents worked all of their lives, her father retired in 1992 with a pension that was adequate at that time. They had no debts and owned their nice home free and clear in a Front Range city in Colorado. As time passed inflation, including taxes, insurance, food, in fact all living expenses continued to rise. But, the pension and Social Security did not keep up with inflation.

In about 2005 The parents (he was age 81, she 80) determined that their total income was insuficient to cover their living costs. Herk, my employee, told me that he had been helping his wife's parents but their situtation was such that they could not continue to live in their home without at least an additional approximately $6,000 per year income that was progressing each year. Herk told me that he was not able to continue to increase his financial assistance since he was at his limit too. In Kerk's words to me, "Democrat Policies have created the inflation and impacted the ability of my wife's parents to continue to enjoy their last years on their limited income, even with their asset of the nice home that they earned".

The parents wanted to live in the home where they had lived most of their lives and at their ages, with their limited income, did not feel that they were able to sell out and move. But thay could no long afford to live there. They visited a financial advisor who helped them get a Reverse Mortgage in 2005. The reverse mortgage gave them a line of credit of just over $250,000 on their home, tax appraised at about $400,000 in Fort Collins, that they could draw in any amount any time as needed.

With the Reverse Mortgage the old couple were able to live comfortably, enjoy life, even do some traveling that they had not been able to do before, and Herk and his wife no longer had to provide financial help. They were able to maintain their home and pay the upkeep cost including new painting, etc. Herk told me that the old couple had been recently drawing an average of about $1,000 or more per month from the Reverse Mortgage to continue their living comfort.

In 2010 the old man died (at age almost 91), leaving his widow living in the home. At her age she was able to remain in the home with only minor assistance with her living costs as needed with the Reverse Mortgage to supplement her income.

She died in October, 2013. Under the terms of the Reverse Mortgage and the Revocable Trust set up by the old comple years ago, Herk and his wife were able sell the home (they do not need it for themselves), pay off the balance of the Reverse Morgage Contract and they received the balance of the home sale, less cost of the sale, in an amount of over $300,000.

Herk remains an employee with me and he is able to invest the proceeds from the inheritance that his wife's parents were able to protect with their Reverse Mortgage.
Without the Reverse Mortgage the parents would never have been able to keep their home and protect not only their one lifestyle but Herk's family inheritance.

 

[Cooperhawk]

Well said Will. I too have seen the happy results of an RM.

 

[wunbe]

Soooo, the RM is really only for folks with no income, and no heirs or heirs you want to screw with repaying your RM loan?

And if you survive, what if you or/and you and your wife needs to go into a nursing home? No equity left and a loan to pay.... Sounds like great foresight to me.

Being a federal program of course makes it a rock solid option! Ohmigod, I can just imagine what input the real estate and banking lobbies had in shaping that federal 'benefit'!

There are more ways of getting screwed here than in a freindly game of poker in the back of a pool hall.

wunbe

 

[gramps]

RM is a tool. Used appropriately it is a good thing. Used inappropriately, it can be a pox on life!
gramps

 

[Bull Barrel]

Coop, what you said isnt quite true. My folks "sold" me their home and 4 years later went into a skilled nursing home. Since they had cash assets we formed a trust and paid the trust the same amout per month as we paid the home. When we got down to the point they qualified for Medicaid that took over paying for the home. When they both passed i had the bank split the trust fund between my brother and myself. I live in the house debt free.

 

[Cooperhawk]

That's a good way to do it I'm sure, but lots of folks don't have children they can trust like your, did, and have no other choice.

 

[K1500]

It is a loan. Loans require interest to be paid.
It is a loan. Loans require interest to be paid.
It is a loan. Loans require interest to be paid.

Why in the world does the OP expect someone to give a bunch of money to someone else and be paid back years later with no interest? I would gladly take all the interest free money you want to give me.

 

[powder smoke]

Because of the adds they are misleading as usual. The have a celebrity
pitch the LOAN and makes it sound so good. The old saying
" A$$ Grass or Gas No One Rides For Free "