Reverse Mortages...

[Sleek-Jet]

who can tell me about them??
My grandparents have decided to pull one on their house. I've read a little about them a while back, but still not real clear on how it works. :idea:

[cdog]

who can tell me about them??
My grandparents have decided to pull one on their house. I've read a little about them a while back, but still not real clear on how it works. :idea:
No inheritance for you! :cry: Tell them to hit the early bird special more often and leave their equity alone. Geeze. Real bad idea. Basically they will get money from the lender who will own the equity in the home. If they live long enough nothing will be left.

[Sleek-Jet]

No inheritance for you! :cry: Tell them to hit the early bird special more often and leave their equity alone. Geeze. Real bad idea. Basically they will get money from the lender who will own the equity in the home. If they live long enough nothing will be left.
I wasn't going to get anything anyways, but I was hoping my mother would... I hate to see the land and the house lost as well...
So, the principal they have in the bank is racking up interest, just like a standard mortage, just that it's going back against the balance due on the house, correct??
The whole family thinks that it's "free money". I say BS, someone is making money on this deal. People don't just lend for free...

[cdog]

Ya it's a pretty desperate move for people who can't afford to live on their retirement. Tell them to save the the fruit cake's and AZ T-shirts with wolves for christmas so they can live on what they have. You never know when they will actually need the $$$ for something important.

[Cole Trickle]

They paid interest to buy the house and now they are paying intrest to slowly sell it.
If it's paid off they need to sell it and buy something cheaper and dump the extra $$ in the bank to live on.(Depending on where they live and move to they could put a couple 100K in the bank and live off the intrest)
Not a smart choice.

[BajaMike]

I wasn't going to get anything anyways, but I was hoping my mother would... I hate to see the land and the house lost as well...
So, the principal they have in the bank is racking up interest, just like a standard mortage, just that it's going back against the balance due on the house, correct??
The whole family thinks that it's "free money". I say BS, someone is making money on this deal. People don't just lend for free...
That's not exactly right. It's like buying a lifetime annuity, only the equity in the house is buying it. They get a lump sum for the house, but can still live in it as long as they are alive. When they both die, the house goes to the reverse mortgage company. If they live 50 years, it's a good deal. If they die soon, they get screwed.
:idea:

[Sleek-Jet]

OK, thanks guys, that's how I understood it worked. Just wanted to make sure.

[Prop Rod]

just my .02 cents,
The house in the end does not go to the lending institution, the house is left to the heirs of the family at which point in time the loan needs to be paid off. Keep in mind that there is a small grace period in which the lender should let you deal with the loss of family and get the house and finances in order.
This is a FHA backed loan, and if for some reason the balance of the loan exceeds the value of the home that is a loss FHA is going to take, not the family.
There are several different options they have for getting equity from their home in a reverse mortgage, they can take a lump sum, a lump sum and monthly tenur, or just a certian amount of money per month they need to supplement their current income. Depending on what what option they go with will depend on how quickly equity will be obsorbed.
Two other things to think about, every mortgage company that offers reverse mortgage's are bound by law to send the client through a third party counseling service that is not affiliated with the lender to ensure the clients understand the process completly, secondly, most and i stress most, lenders are not out to own real estate so reputable company will have the best intrest in the client.
If you have additional questions and would like to speak with me i will be more than happy to explain in detail how this works. You can p/m or call me @ 928-830-9285.
Douglas Petsco