If I do a reverse mortgage can I get a large amount up front and then the balance in payments?
I have meet the requirements for a reverse mortgage and I was wondering if I can get a lump sum amount up front to do some repairs and then the balance in payments/
Yes, it’s your choice how you receive the money: lump sum, in monthly payments, as a line of credit (LOC), or a combination. It is your money to do with as you wish. If you choose the LOC and/or monthly draws, then you are limited to the program with an adjustable rate; but this is not necessarily a bad thing. If you want the fixed rate program, then you are required to take out all the money up front in a lump sum.
Because this is a negative amortization loan, interest accrues only on what you take out, when you take it out, compounded, so it will accrue much faster if you take the money in a lump sum. If you need most of the money right away regardless, like to pay off an existing mortgage, then it makes sense to go for the fixed rate since you will be taking most of the money out anyway. But taking out all the money up front just to get a fixed rate, with the intent of investing it somewhere with a higher yield rarely works, and is usually too risky for someone of your age.
But if you don’t need most of it right away, and you are on the younger side, then you should seriously consider the adjustable program as a viable alternative. The funds that remain unused in your LOC will grow over time, last you longer, and interest will accrue only on what you have taken out. This will preserve the equity remaining in your home much longer, in case you have to refinance down the road, or if a legacy is important to you and you want to make sure there will remain more for your children when you pass away.
There is no right or wrong choice. Look at what you need right now and within the next 12 months; and ask your broker to provide you with an amortization table using different scenarios under both the fixed rate and the adjustable rate programs so you can get a snapshot of what your funds will look like in 5, 10, 20 years from now – both in your LOC and in your loan balance.
Anyone know anything about reverse mortgage?
My in-laws are getting on in years. 75 and 73. They are struggeling to keep the house and pay bills. I’ve see the commercials for reverse mortgage, sounds good to me but they would make is sound good in a commercial. Can you tell me if this is a good thing? As long as they get money to live on while they are still alive, that’s fine. We don’t care if we inherit the house and such. Any info would be appreciated. Thanks.
Reverse Mortgages are a good option for some, not all.
There is a formula that calculates their age & value of the house to determine what $ amount they could get.
You can only have a small loan on the house or paid off.
They require a minimum standard for the condition so repairs may have to be made if needed.
They can be fee heavy and there maybe better options.
Here is a Q&A
my mom has recently past away and she has left me her home, the problem is she has a reverse mortgage?
she has a reverse mortgage on the home. what can i do?
You refinance the property and repay the mortgage, or use other funds from her estate to pay it.
Has anyone ever had a Reverse Mortgage on their home?
I am approaching 62, and have heard about these “reverse mortgages”. Have any of you done so? And good and bad points? Would you “do it again?”
They have pretty high fees so unless you plan to live in that house the rest of your life and leaving nothing to heirs probably a bad idea.
You can read about them on AARP or HUD websites. You can get them as young as 62 but they only lend you about half the value of your home over your life expectancy. If you waited until you were 80 you would get more money because you are older and because your home may be worth more than it is now.
I am 59 and have been looking at them because I have no heirs but will wait until I am much older and sure I will want to age in place.
Just because you are over 65 and you have equity in your home, is a reverse mortgage better than a normal mortgage? What are the benefits to doing a reverse mortgage?
Does the bank actually own the home if you do decide to go with a reverse mortgage? So you only receive up to 65% of the value of the equity in your home as of the time that you sign for the rev. mortgage? If you live fifteen more years and your home appreciates another 500,000 what happens to that equity?
I would speak to the heirs about this.
Reverse mortgage PAYS YOU EVERY single month for the rest of your life. You get to live in the home and not have to worry about making a mortgage payment.
They take the equity of your house…and pay you
your heirs can buy back the home after you pass away.
On a regular mortgage YOU have to pay the mortgage..
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