Reverse mortgage

[CathyA]

I don't know all the facts about this, but I find some of the comments on the commercials about it sort of strange. The 2 comments that sounded curious to me are:

"You receive money every month, and still own your own home"
and
"You can stay in your home, as long as you live there". Huh?

Its sort of like a Home Equity Loan, right? And if you use up all the worth of the house, it is no longer your house and you wouldn't be allowed to live there, right?

[rodeosweetheart]

I don't know all the facts about this, but I find some of the comments on the commercials about it sort of strange. The 2 comments that sounded curious to me are:

"You receive money every month, and still own your own home"
and
"You can stay in your home, as long as you live there". Huh?

Its sort of like a Home Equity Loan, right? And if you use up all the worth of the house, it is no longer your house and you wouldn't be allowed to live there, right?

Here is a link that you may find helpful:

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten

[ToomuchStuff]

A reverse mortgage the don't give you full price. They give you a fixed amount, like a mortgage payment, while your responsible for the maintenance and upkeep, taxes, etc. When you die, they get the house or it must be paid off immediately, via insurance or such.

It is a ripoff for deperate people.

[CathyA]

Thanks rodeosweetheart.
ToomuchStuff.......I figured it wasn't as good as it sounds. But you're right.....I think its for desperate people too. But like all things on TV, they make it sound like such a sweet deal.

[Spartana]

I looked into reverse mortgages when my Mom was thinkng of getting one. They do not give you the full value of your house - usually only 20% to 30% depending on your age. The older you are the greater percent of your houses value you can get a reverse mortgage for - but usually never over 30%. You can choose how you want to get that money - either as a lump sum or as an open line of credit you withdraw as you need (and only the portion you withdraw gets charged interest). Unlike a home equity loan or line of credit, you do not have to make any monthly payments at all while you own the home. If you sell your house or pass away, then you repay the loan out of the sale proceeds - plus the accrured interest and any fees that were tacked onto the loan. You, or your heirs, get any remaining equity left after repayment.

The beauty of a reverse mortgage is that you never make any payments to the loan while you are living in the house - thus increasing your income so you can remain in your home in retirement - and often times (well... at least in normal times) your house will continue to appreciate and it's value to grow so that when the house is sold, it's value may have increased enough to cover the portion of the reverse mortgage you own, plus have a lot left over for yourself or your heirs. However, there are fairly expensive fees to get the loan as well as the interest rates are generally higher than a conventional home loan would be - more inline with home equity loan rates. And you can't get them until you are at least 63 I believe - maybe 65 - and you have to have a fairly large amount of equity in your house or have it payed off completely. And it also has to be your primary house that you live in not a second home or rental property you own. And because the loan to value amount is relatively low (again - maybe 20 to 30 % of the total homes equaity value) the chances of you out living your reverse mortgage is almost nil.

[goldensmom]

I don't know all the particulars but my parents had a reverse mortgage. It was a particular amount in an account that they could draw from and allowed them to live in a manner that they would not otherwise have been able to live. When my last parent died, I paid off the mortgage, did not have to sell the house, just paid it off as part of all the other estate business.

[San Onofre Guy]

Now I might take a different view in 30-40 years, but from my perspective, staying in the family home when you can't afford it is not smart. I can't tell you how often I hear seniors fretting about the need to do maintenance on a property or the difficulty in getting around. One of the major contributors to depression is lack of contact with others and worrying about money.

Living in a single family dwelling while young with a family or even for that matter in early retirement is a good thing. However as one gets less mobile, ie. stops driving and stops being able to do yard work and minor maintenance, a single family home in the suburbs is not a healthy place to live. As humans we are for the most part social creatures and need contact with people of all ages. Selling the home that you raised a family in and moving to an urban setting apartment or condo with shopping and activities close by really improves the quality of life.

I agree that many seniors cannot fathom selling "home", but often times "home" is not the same anymore. When you can't get out, you tend to sit around and watch the structure and grounds deteriorate which causes you to concentrate on how you are failing and it can become a downward spiral.

[Spartana]

Now I might take a different view in 30-40 years, but from my perspective, staying in the family home when you can't afford it is not smart. I can't tell you how often I hear seniors fretting about the need to do maintenance on a property or the difficulty in getting around. One of the major contributors to depression is lack of contact with others and worrying about money.

Living in a single family dwelling while young with a family or even for that matter in early retirement is a good thing. However as one gets less mobile, ie. stops driving and stops being able to do yard work and minor maintenance, a single family home in the suburbs is not a healthy place to live. As humans we are for the most part social creatures and need contact with people of all ages. Selling the home that you raised a family in and moving to an urban setting apartment or condo with shopping and activities close by really improves the quality of life.

I agree that many seniors cannot fathom selling "home", but often times "home" is not the same anymore. When you can't get out, you tend to sit around and watch the structure and grounds deteriorate which causes you to concentrate on how you are failing and it can become a downward spiral.

I totally agree. That's why my Mom choose to sell her house (to me!) rather than get a reverse mortgage. She downsized, bought a small condo with cash, and had close to $100K left over to suppliment her tiny soc. sec. payment. I know people get attached to their homes and 'hoods but not me. I'd sell and downsize before ever getting a reverse mortgage or home equaity loan to stay in my home. Now if I was already downsized as much as I could but needed some extra cash then maybe I'd do it.

[fidgiegirl]

Yeah, Grandma moved to town which is going great, but won't sell her property for less than a ridiculous amount MORE than it appraised for, so she is really worried about money while it just sits there. Sigh.

In-laws have a reverse mortgage. I kind of get it, but figure nothing will be left when they are gone. That's ok.