Your Questions About Reverse Mortgage

Richard asks…

What would be the advantages and disadvantages of a reverse mortgage.?

admin answers:

Advantage:
– allows equity in home to be converted to cash flow by borrowing with no monthly repayment (repayment due at maturity … Presumably by liquidating the collateral) or with interest only payments
– this can be a useful mechanism, particularly for older ‘property rich/cash poor’ persons to augment their cash flow … However …

Disadvantage:
– at some point, the equity in the collateral property is fully borrowed and a large balance is owed against it (ie borrower has little or no remaining equity in the property)
– in the case of an older borrower, this means a smaller estate to pass along and the risk of outliving the cash flows from the reverse mortgage … Which translates to no house, no more borrowing capability, no more cash flow, no more,no more, no more

David asks…

Is the NewDay Reverse Mortgage loan a scam?

My grandma received a letter from this company in the mail the other day and it talks about her being pre-approved for a lump sum payment, and I really don’t believe them but they even say they are a government insured program.

admin answers:

Junk mail. Never do business with anyone that calls you or sends you mail.
These will always be the worst companies to deal with.

Reverse mortgages are common, but a much better idea is to sell the home he is in and buy a smaller place or even rent something he can easily afford.
Reverse mortgages are one of the worse financial decisions a person can make.
The charges and fees will eat him up alive.

Ruth asks…

does anyone have any information on a reverse mortgage?

Is it a good deal? what are the advantages and disadvantages?

admin answers:

NO, it is a bad deal. You are pretty much giving your house away and you could end up with no assets and many more years to support yourself.

Joseph asks…

To Seniors who have engaged in a Reverse Mortgage with a bank (not with a broker) -?

have you had any negative experience, especially at closing it out? Mine is new, but I am not totally comfortable with the possible outcome at payoff.

admin answers:

One woman I know at age 84 did one. Lender required home improvements, with their contractor. Contractor charged $45,000.00, taken out of the reverse mortgage. The only work done was replacement of five 4’8′ ‘posts’ on her front porch, and painted, and three wooden grab bars were installed at her three doors. That’s a $44,000.00 rip off.

James asks…

Is reverse mortgage just a selfish way banks steal your inheritance?

admin answers:

They can’t steal your inheritance, they can only lend money on property owned by the person who wishes to borrow it. If the property belongs to you they would not be able to do that. You are not entitled to anything of your parents, they are entitled to use their assets as they see fit.

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Your Questions About Reverse Mortgage Lenders

Daniel asks…

heirs and reverse morgtage upon death of home owner?

Is there any law when the heirs of a home with a reverse mortgage loan don’t let the lenders know borrower died and continue to receive the monthy payments and live in the house.what is the punishment

admin answers:

That would be rather stupid. Why wouldn’t they just sell the home, and then get a lump sum for the equity?

A reverse mortage is just a loan against the equity, so they are just borrowing against their own money, and then paying interest on it. Reverse mortages have fixed terms as well, even if the person who took out the loan when ther term expires, then have to pay the mortage back in one lump sum, usually by selling the home.

Joseph asks…

capital gaines taxes and no money will be made from the sale of our fathers home?

no profit will be made from the sale of our fathers home 1ST mortgage and 2ND ( some kind for reverse mortgage ) has to be repaid to lenders , Brother says we have to pay capital gains taxes . I know he is full of it ! He also says we don’t have to repay the 300.00 2ND ( reverse mortgage ? that paid my father 5,000 each month for 3 years ) and for 6 months that my brother cashed anyway after Dad died

admin answers:

Whoever is the executor of your father’s estate should be using an estate attorney to advise him/her on these matters. You won’t get informed advice here. However, any taxes due on the estate’s assets are paid for by the estate prior to final settlement. Heirs are not taxed directly.

Susan asks…

A lot of people think, to take some of the spotlight off of Barack Obama?

A lot of people think, to take some of the spotlight off of Barack Obama, that John McCain will announce his vice presidential choice this week. And most think it’s gonna be Mitt Romney. See, I don’t know. You know, when Romney and McCain stand together, doesn’t it look like one of those slick Countrywide lenders trying to trick your grandfather into reverse mortgage
what do you think?

admin answers:

I think most Americans are going to reject McCain/Mitt and their lobbyists friends.

Richard asks…

How do reverse mortgages work, in simple terms?

I must be stupid or something, but I’ve been reading about reverse mortgages and I just can’t seem to understand the concept.

My boyfriend’s dad just decided to do it. He has some mental illnesses and tends to get taken advantage of, particularly in regards to money. Unfortunately his wife passed away last year. Essentially, what is a reverse mortgage and what does that mean for my boyfriend (in simple terms, please)? Why are you given money? What’s in it for the lender? Will the house still go to my boyfriend if his father passes away? Does this cause you to go further into debt?

I believe he bought the house 25 years ago for $80,000. I estimate it’s worth $120,000 now. Pretending he still owes $30,000 for it… what does that situation look like?

admin answers:

My peers are partly correct.

A Reverse mortgage is exactly what it sounds like; instead of the
borrower making monthly payments to the lender after getting
a lump sum payment……the lender lends the borrower a fixed monthly payment. NO payment is due to the lender till the
end of the mortgage when either…….
The borrower has died and the estate does not want the house
so the lender forecloses.

Or……….the insurance if there is any, pays back the
lender and the house is debt free to the estate.

Or, if the borrower lives long enough, at the end of the
mortgage life [loan], he needs to re-finance
the home so that the lender is paid back.

Mandy asks…

How often does Soc. Sec. reverse a “favorable” decision?

We receive disability.

My mortgage lender goes “Oh my, your case is reviewed in a mere two yrs instead of three yrs!!”

“OH MY!” indeed!!!

Am I correct to fear that they may reverse my case? Wouldn’t logic conclude that a reversal of the original decision (by a judge) was “wrong” and that I would be responsible to pay back money from like fraud or something?

It’s not fraud.

I’ve owed (and went bankrupt) over $20,000 medical bills. I’ve been institutionalized at 2 times for over a month each, and once for a week (on a few different hospital stays.).

I’m trying to buy a house. should I use my $19,000 settlement for a $19,000 problem fixer upper house, or should I resort to making payments -like most grown up adults tend to do- for the rest of my LIFE?! Put down payment on a $60,000 house? I fear losing my source of income (disability)!!!!!!!! I could have a no payments need problem house. (is it a “problem”? I don’t know. I’ll need the structure guy, the pest control official, and the septic Environmental healthy guy to deem the place “livable” … ) anyway, believe it or not, the cost would be the same :

$44,000 (if you add the potential problems: new roof expense 12,000 $ in 2 yrs, in 3 yrs maybe new septic at $10,000) or should I buy a
“perfect” $60,000 house With a new roof already on it? I put down my $10,000 or $19,000 and get $6000 back from the Gov Obama house stimulus (yes I qualify. I had to make a lot of phone calls, as I do not even FILE taxes, but Yes, I CAN file a “tax amendment” to receive back the gove. $6000 on my $60,000 house)

do I need to fear losing my disability claim?????

I’m Manic Depressive Bi Polar…. documented. It will never go away… but… I have sporadic periods of work history and NOT so good work history! I’ve even worked (what some people call “high stress”) high responsibility bank teller jobs. I was the “assistant job set up person” in a factory (by default. None of the older gentleman wanted to learn the computer.I’m young. I’d love to learn the cpu.).

what are your thoughts on this?

(I’m not going to fix the roof myself, I’d hire someone.) but you know what, that $60,000 new roof house will not be so “new” in 30 yrs. I’ll have to replace it in 30 yrs!!!!!!!! Good Grief!!!!!!! Does this ever end?
I plan to pay $19,000 cash for the house, and save $800 per month towards the roof. In 1-2 yrs we could pay someone to fix it. Same for the septic, in the next 4 yrs we will fix that one. There are too many people living in the house, taht is the problem. A small woman and small baby will use less septic than three adults and a child currently there.

admin answers:

The problem you will run into is that if you buy a fixer upper, you take the risk of not being to qualify for a $12,000 loan for a new roof since you will also owe $44,000 for the loan of the house. It will be hard to qualify on disability for two large loans. You should go for a home that is as problem free as you can find it. Most people put down 20% when purchasing a new home. You also will have the occasional repair such as heating/air expenses and even replacing the units which costs around $3000. Then there is the hot water tank about every 10 to 15 years. Also appliances break down and need repairing. Then there is the plumbing when it goes on the blitz, and you will have the added repair of the septic tank.

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