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BS: Reverse Mortgage???
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Subject: BS: Reverse Mortgage??? From: Bobert Date: 22 Jan 13 - 07:03 PM I mighta asked this before but if I did I don't remember what folks said... Anyone investigated "reverse mortgages"??? If so, how's it workin'??? B~ |
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Subject: RE: BS: Reverse Mortgage??? From: kendall Date: 22 Jan 13 - 07:21 PM We are working on that right now. There are pros and cons. Basically, if you are over 62 and you own your home or you have enough equity in it, you can get a reverse mortgage which is actually a loan. Neither Jacqui's nor my kids want the place when we snuff it, so until the last of us dies there is no mortgage payment. If the kids decide they want the place, they have to continue the mortgage, or sell it and pay it off. We still have to pay the taxes and insurance. We also have to maintain the place. Putting that mortgage payment in our savings account feels better than sending it to Bank of America in California. Any questions? |
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Subject: RE: BS: Reverse Mortgage??? From: Bill D Date: 22 Jan 13 - 07:39 PM The mortgage people give you a 'loan' based on what THEY consider the property will be worth.... and it may not be near what the market value of the property is. My son 'may' need the place, but we have no idea if we can wait till he is able to deal with it. That loan only applies while the owners live there. We also need to do some cosmetic upkeep if we decide to move or look in to a RM. |
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Subject: RE: BS: Reverse Mortgage??? From: gnu Date: 22 Jan 13 - 08:24 PM "We also have to maintain the place." Read the fine print. Is there an inspection done when they calculate the "sum"? And how does that "maintain" enter into the takeover when youse "decide to leave*"? * I prefer that term to "snuff it". Got a lot of relatives soon to leave and some that just have so I am in denial. Humour me. |
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Subject: RE: BS: Reverse Mortgage??? From: Janie Date: 22 Jan 13 - 08:46 PM There is some good information re: pros and cons on-line. Check them out. Consumer Reports, as I recall has some good information. If you don't subscribe let me know. I subscribe on-line and can research it, print it out and mail what they have to you. NPR also has some good information archived. |
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Subject: RE: BS: Reverse Mortgage??? From: Bobert Date: 22 Jan 13 - 09:10 PM Just got an offer from "Consumer Reports" in the mail today, Janie... Might have to fish it outta the trash... B~ |
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Subject: RE: BS: Reverse Mortgage??? From: Rapparee Date: 22 Jan 13 - 09:30 PM I'd look long and hard at it...they can be a rotten deal, according to my wife the shyster lawyer. |
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Subject: RE: BS: Reverse Mortgage??? From: gnu Date: 22 Jan 13 - 09:57 PM "No free lunch." is the rule of thumb, innit? |
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Subject: RE: BS: Reverse Mortgage??? From: Bill D Date: 22 Jan 13 - 10:26 PM Look at it this way... no bank or lending institution is gonna spend millions on TV ads selling a deal that is not basically a better deal for THEM! It 'may' be useful to you in certain cases...just like insurance.... but do read the fine print. |
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Subject: RE: BS: Reverse Mortgage??? From: Jack the Sailor Date: 22 Jan 13 - 10:49 PM Kendall seems to have analyzed the situation quite well. If you need the income and don't want to leave someone the house.... |
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Subject: RE: BS: Reverse Mortgage??? From: Janie Date: 22 Jan 13 - 11:28 PM Better yet, Bobert, if you are not a big consumer, save the subscription money and visit your local library. I did some fairly extensive research on reverse mortgages a few years ago, just doing some thinking ahead. I have a mind like a sieve so can't recall details. What I remember (and I don't guarantee my memory) is that there are some fairly narrow circumstances where a reverse mortgage may make sense, but if the quest is for retirement income while one is still relatively young, the risks generally outweigh the benefits. I know this is vague, but my memory is there are particularly significant hazards if the mortgage is taken out while both spouses are living and one spouse dies. I recall that I decided I wasn't going to completely discard the idea as I get older, but there is a lot of risk involved. The Bank is definitely more protected than is the consumer. I just quickly googled "reverse mortgage." bunch of NPR stuff which is usually good food for thought and tending toward cautionary while describing the potential benefits. If you want me to research consumer reports, let me know. |
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Subject: RE: BS: Reverse Mortgage??? From: Beer Date: 22 Jan 13 - 11:49 PM Don't do it. Any big company offering you a deal will be in it for their gains . Not your's. ad. |
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Subject: RE: BS: Reverse Mortgage??? From: GUEST,Allan Conn Date: 23 Jan 13 - 02:48 AM "Any big company offering you a deal will be in it for their gains" You could say that about any kind of financial deal! |
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Subject: RE: BS: Reverse Mortgage??? From: nager Date: 23 Jan 13 - 03:37 AM There have been many bad reports about it here in Australia. |
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Subject: RE: BS: Reverse Mortgage??? From: John MacKenzie Date: 23 Jan 13 - 05:37 AM It's called Equity Release in the UK. I have made enquiries about it, with one firm. Since I made that original enquiry, I have had a never ending stream of leaflets and letters through my letter box. The letters never say on the outside who they are from, most often they are official looking "window" envelopes, that you just have to open. I am pissed off with their crap, and as has been said, there must be money in it for them. However, having said that, it's still a route I might take. It's silly having about £200,000 tied up in a house, and struggling to live on an old age pension. The company advances you a loan, against the value of your house at your death. We own the house outright, so it's a simple sum to work out.The older you are, the bigger the chunk they will advance. When you die the house is sold, and the loan + interest, is repaid. Any money remaining goes into your estate. |
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Subject: RE: BS: Reverse Mortgage??? From: gnu Date: 23 Jan 13 - 06:03 AM The ads I see on TV here say "while you are still living in your home" which may not be the case before you die. |
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Subject: RE: BS: Reverse Mortgage??? From: John MacKenzie Date: 23 Jan 13 - 07:07 AM Yes, you can sell and move, but they don't really like you doing that, as it buggers up their income forecasts, and some will charge you extra for an early settlement. |
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Subject: RE: BS: Reverse Mortgage??? From: jacqui.c Date: 23 Jan 13 - 07:27 AM Before we could go ahead with this we had to go see an independent counsellor who went through the whole process with us.It seems that, at one time, if the property value was less than the loan at the time of the second person leaving the house, there could be a claw back against the estate. Nowadays that eventuality is covered by insurance, the cost of which is rolled into the loan. We have a reasonable idea of what the property is worth - we have a friend who is a local realtor. Now we're waiting for the valuer to come along and give their opinion. Obviously, if they come in with a much lower figure we will not go along with the deal. If both of us do not live on the property for more than a year it can be recovered by the company. They term occupancy as being there for six months of the year. So far, and we spent over an hour with an independent guy who had no connection with the company we are using, we cannot see any insurmountable pitfalls. |
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Subject: RE: BS: Reverse Mortgage??? From: kendall Date: 23 Jan 13 - 07:54 AM This councillor is with HUD, (housing and urban development). It is his job to make sure we know exactly what we are getting into. Our kids don't want the place, they all have their own diggings, we have no plans to move or sell, and that monthly mortgage payment is considerable. When we snuff it we don't care what happens to the place. Meantime, if I live another 10 years I will recover what I put down in the first place in mortgage payments that I won't be making. For us, it's a good deal all around. Your milage may vary. |
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Subject: RE: BS: Reverse Mortgage??? From: gnu Date: 23 Jan 13 - 08:05 AM John... the situation may also be having to move into an "assited living facility" = old folks home = nursing home = whatever. |
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Subject: RE: BS: Reverse Mortgage??? From: John MacKenzie Date: 23 Jan 13 - 08:33 AM Yup, that's something we're all looking at as a possibility. The loan is repayable on the sale of the house. The circumstances of that sale are immaterial. The law here is different to what Kendall stated. Here, if the value of the property is less than the amount owed, the companies cannot claim from any surviving relatives. |
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Subject: RE: BS: Reverse Mortgage??? From: Bobert Date: 23 Jan 13 - 09:25 AM All this would be a mute point had the real estate market not blown up in 2008 because we had/have most of our assets in, ahhhh, real estate... I guess, as Jacqui and Kendall, are exploring that we might be one of the few who might benefit... Yeah, it'd be nice to have the house clear and free to leave to my son but we have one particularly nice piece of commercial property back in Virgina that we can leave him... Anyway, I'm going to, at least, keep an open mind... B~ |
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Subject: RE: BS: Reverse Mortgage??? From: jacqui.c Date: 23 Jan 13 - 10:02 AM Here, if the value of the property is less than the amount owed, the companies cannot claim from any surviving relatives. That used to be the case here John, but has now been dealt with by taking out insurance against the possibility, the cost of which is rolled into the loan. Bobert - we'll let you know how things develop. |
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Subject: RE: BS: Reverse Mortgage??? From: GUEST,Peter Date: 23 Jan 13 - 11:30 AM Do be clear what the deal is. My aunt signed up for one which involved the company buying a share of the property off her rather than just lending her money. |
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Subject: RE: BS: Reverse Mortgage??? From: Ron Davies Date: 23 Jan 13 - 12:58 PM According to the information which comes up to the right when you bring up this thread: "Loan balance gets larger over time." |
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Subject: RE: BS: Reverse Mortgage??? From: John MacKenzie Date: 23 Jan 13 - 01:29 PM Well that's because interest is added as it matures, Ron. |
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Subject: RE: BS: Reverse Mortgage??? From: Q (Frank Staplin) Date: 23 Jan 13 - 01:47 PM Adds running on TV here refer to the reverse mortgage as tax-free cash- Of course it is tax-free, the taxes have already been paid. Interest accrues as the mortgage goes on; the mortgage company makes its money from this as well as fees and insurance (fine print) connected with the loan, plus fees and expenses connected with disposal of the property after one kicks the bucket. Consider this option only if you need the money to live on. Usually better to sell the property, and find a smaller or more economical place for retirement. |
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Subject: RE: BS: Reverse Mortgage??? From: GUEST,Allan Conn Date: 23 Jan 13 - 05:05 PM "Loan balance gets larger over time." It does because generally instead of paying interest it is added to the loan - though you can also pay in. If house prices fall and interest rates are high then it can seriously hit your equity. On the other hand if interst is reasonably low and prices rise then it doesn't affect so much. Penalties in early years for repaying but nowadays many protect against death and have no negative equity guarantees. Like all financial products if they are sold to the right people for the right reasons then they can be a good option. Only talking about UK here! Most complaints historically came not from the customers but from the families after the customers have died. That is why reputable advisers will tend to get any family involved as well as family solicitors, or at least informed, in the early stages. |
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Subject: RE: BS: Reverse Mortgage??? From: Janie Date: 23 Jan 13 - 07:59 PM Kendall and Jacqui, sounds like you are doing your homework to make sure it will be a realistically good risk for you in your circumstances before you make a decision. |
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Subject: RE: BS: Reverse Mortgage??? From: Ron Davies Date: 23 Jan 13 - 10:17 PM As long as people are aware the loan balance grows over time, that's fine. They should be aware--it may be a factor in deciding whether or not to do it. |
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Subject: RE: BS: Reverse Mortgage??? From: GUEST,Allan Conn Date: 24 Jan 13 - 02:35 AM All quotes and Key Facts documents supplied here in the UK are in the exact same format as laid out by FSA rules. They show examples of how the interest would roll up across various interest rates! They are basically just interest only loans with the interest being rolled up rather than physically paid during the term. If you chose to pay it back then it wouldn't roll up. You don't tend to get something for nothing though. They are also more tightly regulated than normal mortgages in the providers looking for a valid reason for raising the capital. If there is not a valid reason they may well knock you back. A valid reason could be you want to help your kids with buying their property, or you need to improve your property, or you need to raise capital for day to day living. I fancy having £30K on tap just in case I need it wouldn't be a very valid reason. |
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Subject: RE: BS: Reverse Mortgage??? From: GUEST,Allan Conn Date: 24 Jan 13 - 02:48 AM Another reason that Equity Release is expanding is because of the tightening and changing of rules in the residential lending market. Companies that were happy for interest only loans to go on until the day dot, apart from one or two exceptions, now look for them to be finished by age 70 or 75, even if there is plenty of income to furnish the debt. Most companies now have real restrictions on any kind of new interest only lending anyway. If someone really needs say a £40K loan then Equity Release can look much more appealing than a capital & repayment loan over 6 or 7 years. Under affordability criteria the capital and repayment loan may not be available anyway! It is quite common for people to come with the need to raise capital and be unable to do so through normal residential lending. |
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Subject: RE: BS: Reverse Mortgage??? From: kendall Date: 24 Jan 13 - 07:49 AM The basic facts: Our kids don't want the place. They have said, "Do it." Nothing happens until we are both dead. It doesn't matter if the interest increases. |
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Subject: RE: BS: Reverse Mortgage??? From: dick greenhaus Date: 24 Jan 13 - 03:45 PM Do the kids also have no interest in the money they could get for selling the place? |
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Subject: RE: BS: Reverse Mortgage??? From: Allan Conn Date: 24 Jan 13 - 03:59 PM Some offspring just want their parents to live comfortably and enjoy their retirement without worrying about how much is going to be left to the next generation. Plus of course let's face it you could end up an invalid and lose most of the value of your house in care fees anyway. |
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Subject: RE: BS: Reverse Mortgage??? From: GUEST,leeneia Date: 24 Jan 13 - 06:17 PM From what I understand, reverse mortgages can carry high fees. Do the research and shop around. However, my mother had one, it made her last years considerably nicer, and we kids didn't miss not inheriting her modest house. However, Bobert, it seems to me you have a different case. Your property there in North Carolina seems to require a lot of upkeep. Can you keep up that hard work involving tractors, tree-cutting, etc until you reach 80 or 90? Or will you have to sell and move sometime? You should ask yourself that. |
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Subject: RE: BS: Reverse Mortgage??? From: gnu Date: 24 Jan 13 - 06:36 PM Kendall... "Nothing happens until we are both dead." THAT, along with the other things you have said makes me wonder if I am invited to the mortgage signing party. I have been to many mortgage burning parties but never the opposite. I would bring some Northumberland Staright lobster, of course. Live long, PARTAAAY, and die happy. Apologies to jac. Ya know, I am gonna look into this stuff. I am 55 and I know about my life so far so I think it's worth getting some facts now. |
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Subject: RE: BS: Reverse Mortgage??? From: Bobert Date: 24 Jan 13 - 07:45 PM Good observations, Leeneia... That is probably going to be the deciding factor... B~ |
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Subject: RE: BS: Reverse Mortgage??? From: gnu Date: 24 Jan 13 - 08:01 PM leeneia... that could also be figured in to the monies available from the deal and may be a consideration. Take my case. Just a few weeks ago I got the diagnosis and prognosis... I will not be able to do that stuff and it will be sooner than later... so, sell and give my place up or go for it and have the coin to get the "jobs" done and stay here? |
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Subject: RE: BS: Reverse Mortgage??? From: Bobert Date: 24 Jan 13 - 08:11 PM Me??? Looking back the last couple years, if I had had my way we'd have have bought a house on the cud-e-sac with a 1/2 acre lot... B~ |
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Subject: RE: BS: Reverse Mortgage??? From: Amos Date: 24 Jan 13 - 08:39 PM With your many talents, your youthful good looks, your unbounded virility, and your keen-eyed calculating skills, Bobear, I would say it is too early to play into RM-monger's hands. The RE market is on the bottom and beginning to creep upward, so you should be able to roll some nice ones and pay off your own mortgage, or build something of comp value and sell it, or some such. Just my witless opinion based on sketchy data. A |
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Subject: RE: BS: Reverse Mortgage??? From: Bobert Date: 24 Jan 13 - 08:55 PM That sketchy data can get getcha into trouble, Amos... Besides, I'll have this house paid for in 18 months... Long story... But I will... Leeneia's point is the one that makes sense... If I can't get this joint whipped into shape so that the maintenance is manageable then I say that 5 years and it's going to be my turn and that 1/2 acre sounds pretty good... B~ |
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Subject: RE: BS: Reverse Mortgage??? From: kendall Date: 25 Jan 13 - 07:29 AM Dick, the kids would still be able to take over and sell this place. They would of course, have to pay back the loan. They have all said, they would rather have us enjoy our declining years, and that mortgage payment will help. Some wise person once said, "Never burden your kids by giving them money." Well, my parents never burdened me! |
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Subject: RE: BS: Reverse Mortgage??? From: Bobert Date: 25 Jan 13 - 09:44 AM My mom, aged 94, is fairly well off... Not rich but seems to have sufficient assets to meet her needs if she lives as long as her mother did: 101... Like most people I just want to see her make it that far -or further - and if it takes exhausting her resources then that would be perfect... I can see Kendall's point and if that's what it takes for he and Jacqui to be comfortable then I'm all for it... I doubt if his kids would feel slighted in the slightest... BTW, as I have stated, this discussion has given me a lot of things to think about... I really hadn't explored the ins and outs but now have a better picture of how it works... I really hadn't thought about the poin that Leeneia brought up in that I would be reducing the equity (duhhhhhhh, Boberdz???)... That alone makes it not a viable alternative for now as I can see us trading the equity we have in this property for a smaller one down the road in 5 or so years... B~ |
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Subject: RE: BS: Reverse Mortgage??? From: kendall Date: 25 Jan 13 - 11:25 AM But reduced equity is irrelevant in our case. Basically, we get to live here rent free until we snuff it. |
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Subject: RE: BS: Reverse Mortgage??? From: kendall Date: 25 Jan 13 - 11:28 AM You must be 62 or older.And you must have enough equity in your property. |
