Reverse mortgage as a borrowing option
11-19-2013, 06:26 AM
#21
Super Member
Join Date: Dec 2011
Location: Horse Country, FL
Posts: 7,341
My mother's father needed improvements on his home during the 'elder' years. My dad scheduled & paid for the repairs when he heard my grandfather had been talking to someone about a reverse mortgage. That convinced me not to do a reverse mortgage...my dad was tight with his money, but he was also wise.
11-19-2013, 07:20 AM
#22
Super Member
Join Date: Jul 2008
Location: Charleston, SC
Posts: 1,640
I heard bad bad things about it. Save up or take a loan but don't do the reverse mortgage. They could be predators and you end up w/o a home. They probably will tell you it's legal---true-=just like those pay day lenders who charge so much interest, the borrower never gets it paid down. Another racket and should be a law against these companies.
11-19-2013, 07:27 AM
#23
Super Member
Join Date: Jul 2008
Location: Charleston, SC
Posts: 1,640
I've seen the guy who they use from the ads. I can't remember his name but probably is his only income--low grade actor. He doesn't care cuz he gets big bucks for doing the ad. Just show you his true character.
It is also going to be a problem for the house finance people, when they have to take the house back. I don't like the celebrities who go on TV and advertise for them. They are all seemingly astute people and should look into what the thing does before they endorse it. There are fees for appraisals, title insurance, loan fee,etc. just the same as getting any other mortgage and they add all this up on your reverse mortgage at the time you start getting money. I might look into a complete refinance of the house with borrowing some more money if the appraisal comes in high enough as the rates for those mortgages are the lowest. Second mortages such as home improvement loans come at a much higher interest rate. I used to be in real estate, so much as I try not to, I notice the rates for mortgages.
11-19-2013, 08:08 AM
#25
Super Member
Join Date: Dec 2009
Location: Duncan, SC, 29334 USA
Posts: 4,580
Reverse Mortgages are the pits.
I have a friend who tried it.
If you have to leave your house for (hospital, rehab, nursing home, etc.) they
can sell the house.
If you cannot pay the taxes & insurance just 1 time,
they can sell the house.
When they say "As Long as you Live in the House" they mean it
leave for and extended period and you are HOMELESS.
It is Another scam just like Check Advancement Loans.
The same with the companies they will buy your
Timed Payment Payouts, they give only a very SMALL
portion of the amount you would have received in full.
I have a friend who tried it.
If you have to leave your house for (hospital, rehab, nursing home, etc.) they
can sell the house.
If you cannot pay the taxes & insurance just 1 time,
they can sell the house.
When they say "As Long as you Live in the House" they mean it
leave for and extended period and you are HOMELESS.
It is Another scam just like Check Advancement Loans.
The same with the companies they will buy your
Timed Payment Payouts, they give only a very SMALL
portion of the amount you would have received in full.
11-19-2013, 09:22 AM
#26
Senior Member
Join Date: Jan 2010
Location: Delaware County, SW of Phila.
Posts: 610
Don't know exact lender but it was a well known national bank; like a Provident or Wells Fargo. She was very disappointed. She borrowed 85,000$ on the house that was appraised at $250,000. The house is now worth about $200,000 with the real estate market drop. She now owes, with interest over 9 years, close to $200,000. It is a no win situation. Don't do it.
11-19-2013, 10:21 AM
#27
Super Member
Join Date: Jan 2010
Location: Arkansas
Posts: 1,124
A friend's parents got a RM on their family farm when the dad became terminally ill. All the money was spent on doctor bills. The widow has no money left, cannot afford to pay rent anywhere else now and has to continue living in the farm house that is too large for her and is in need of repairs.
11-19-2013, 10:33 AM
#28
Super Member
Join Date: Jul 2010
Location: Tallmadge, OH
Posts: 5,120
I don't know anyone personally who got an RM but while visiting friends out of state, one of the friends was trying to settle things after her mother's death. She said not ever to get a reverse mortgage. There was so much involved and it was really not advantageous at all. She thinks her mother got taken and the whole situation was a mess.
11-19-2013, 12:43 PM
#29
Junior Member
Join Date: Nov 2011
Location: Newark, Ohio
Posts: 139
I think reverse mortgage you own your home but can't sell it unless you pay back the payments plus a lot more. It's big financial decision. The house goes to the lender if you have to move due to health or older age. I would get a lawyer that specializes in that before taking the word of a lender. I would borrow on a low interest credit card before taking out an equity loan.
11-19-2013, 01:53 PM
#30
Super Member
Join Date: Sep 2010
Location: Myrtle Beach, SC
Posts: 8,108
While I'm not a financial expert, my opinion is that you are better off with a home equity loan. Why? Because while you don't have to pay a reverse mortgage back, you do accrue MORE interest on the reverse mortgage loan every month that it is outstanding. Over time, the interest can raise the amount you owe on your home to more than the home is worth if you try to sell it.
Reverse mortgage is, in my opinion, a 'legal' scam. The guy who advertises it used to be on Law and Order and was a US Senator, Fred Thompson. He actually ran for President in 2008 - got weeded out early. He was, by the way, Senator for TN from 1994 to 2003, and also was a practicing lawyer before getting into acting. He's a smart man, but I can't see that anything he's done in the past qualifies him to give financial advice to anyone. He's basically an unwanted telemarketer who comes into our homes via TV ads.
Having said that, it may be the only choice for those who have no other assets, on a low fixed income and need additional cash flowing in every month to live.
[h=2]Reverse Mortgage Cons[/h]
Reverse mortgage is, in my opinion, a 'legal' scam. The guy who advertises it used to be on Law and Order and was a US Senator, Fred Thompson. He actually ran for President in 2008 - got weeded out early. He was, by the way, Senator for TN from 1994 to 2003, and also was a practicing lawyer before getting into acting. He's a smart man, but I can't see that anything he's done in the past qualifies him to give financial advice to anyone. He's basically an unwanted telemarketer who comes into our homes via TV ads.
Having said that, it may be the only choice for those who have no other assets, on a low fixed income and need additional cash flowing in every month to live.
[h=2]Reverse Mortgage Cons[/h]
- The fees on a reverse mortgage are the same as a traditional FHA mortgage but are higher than a conventional mortgage because of the insurance cost. The largest costs are:
- The loan balance gets larger over time and the value of the estate/inheritance may decrease over time.
- Although Social Security and Medicare are not affected, Medicaid and other need-based government assistance can be affected if too much funds are withdrawn (and not spent) in one month. (Note that this could mean that if you need to be in a nursing home, you won't qualify for Medicaid assistance because of the income from your reverse mortgage. )
- The program is not well understood by most individuals. However, the availability of independent reverse mortgage counseling helps.
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