4 Replies Latest reply on Aug 12, 2010 1:39 PM by vvv

    Reverse Mortgages

    MyR Community Manager

      Recently, Kiplinger featured a fairly informative article on reverse mortgages.  Do you have any experience (good or bad) with reverse mortgages?  Please reply (lower right) to share what you know about these loan vehicles often marketed to retirees.

      Read the Kiplinger article>>

        • Re: Reverse Mortgages
          jbonsall43
          Last year I attended a retirement class. One of the subjects was Reverse mortgages. The gentleman suggested to us to use this as a last resort. Here is how it was told to us how it worked. Let's say your house is worth $200,000.00 and the bank gives you a reverse mortgage for that amount ( now the bank owns your house). Now your living good and everything seems to be OK. Now you pass away, a few days later the bank comes in and since the the bank now owns the house (because of the reverse mortgage) they will ask for the loan to be paid back. If who ever inheirts the estate doesn't have the money than the bank will sell the house. Now if the housing market is good and the bank sells the house for, lets say 250,000.00 than the bank makes a profit in the amount of  $50,000.00. IF the housing market is bad like it is now they will put the house up for sale and let say they only get $175,000.00 for the house, who ever inheirt the estate will be responsable for paying the remaining amount ($25,000.00). Not sure if the helps or not.. Good luck
            • Re: Reverse Mortgages
              jkom51

              Unfortunately, jbonsall43, you need to read the Kiplinger article. The banks WILL NOT give you a reverse mortgage for the full value of your home equity. You only get a percentage of it, to allow for fluctuations in value.

              The extremely high fee costs for reverse mortgages make them a last resort for desperate homeowners.

              There are also fewer banks lending reverse mortgages these days, especially with the changes in appraisal rules pushed by the FHA. In our area the appraisers are really low-balling properties because they have no choice but to include recent foreclosure sales. This brings down the value of even top-notch 'turnkey' homes, which means there's even less money permitted on a reverse mortgage. I frankly don't see how they're a viable option any longer for most homeowners.

              • Re: Reverse Mortgages
                JerryD
                It seems to me, although I have not done a detailed analysis, that a reverse mortgage is a theft. The fees are high. Unless one truly needs cash and refuses to move, it is a very poor choice. In my opinion, one would be much better off looking at selling the house and renting or down sizing. Maybe the kids or other beneficiaries would advance some cash if they will inherit and want to keep the house.

                I am not a financial adviser.
                  • Re: Reverse Mortgages
                    vvv

                    they are only good for people that have no spouse or children.....when person dies its the $ or the house....no exceptions....

                    article told fact on couple, she sick and 65 & he was under 65 and could not be a signer as you have to be 65+....did this to pay her medical costs....she unfortunatly dies....mortgagor demands $ or house....long story short....HE LOST HOUSE!!!!!!!!!!!!