Your Questions About Reverse Mortgage Lenders

Nancy asks…

Regarding Reverse Mortgage, what is the pros and cons of HECM lenders vs. non-HECM lenders?

I have done a lot of research regarding reverse mortgage and I understand that this is much like “Payday Advance”. The overall interest including all the fees, etc. are substantial however, it is an opportunity to have the money now. I’ve own my house for close to 35 years now all paid up. It’s a comfortable place situated in a comfortable neighborhood. I don’t want to leave it and go to Belize where I can live on my social security alone. It’s the comfort that I don’t want to lose. If and when I’m incapacitated then I’ll land up in an old age home of sorts. My children are fairly well off and the inheritance left from the house may just cause trouble among them. So by augmenting my income now from this mortgage, I hope to gain a bit more quality and comfort of life. I fully understand the position many contributors endorsed. The math stinks overall. But I wish to enjoy life now. When I croak either way I become the loser. But thanks for the inout.

admin answers:

Money Magazine had a report on reverse mortgages.
They considered them one of the worst financial mistakes a person can make in a lifetime.

They suggested to sell your home.
Take the cash equity and buy a much smaller home or rent.

Are you sure you really want a reverse mortgage.
They are big money makers for the brokers – they can be very pushy
Keep your head on straight with them.

At age 80 – are you really going to want to be taking care of a home?
Cutting the grass, making repairs, fixing faucets.
Get a condo – and let someone else do all the work.
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Charles asks…

Reverse Annuity Mortgage?

What are the risk factors associated with Reverse Annuity Mortgages from lenders‘ and borrowers’ point of view? Explain how they would affect lenders and borrowers

admin answers:

Every reverse mortgage I have seen has been an FHA program for older people and they normally choose to get all the money in one chunk. They are set up so that the owner never has to make a payment as long as they live in the house- but if they go to a retirement home they will need to sell the house and (because of the interest build up and maybe the weak real estate market) the seller might owe more than the house is worth. Again this FHA program is pretty good because it is a non recourse loan so that all the lender can do is take the house – they can’t file against you personally.

Robert asks…

How does a lender benefit from reverse mortgage?

Looks like, what I read tells me, the lender pays the homeowner roughly up to 65% of the home’s value, or up to $625,000

What is the benefit for the lender to put up such cash? Do they collect the house when the borrower dies? Or at any point? What must a borrow “violate” or “do wrong” for the lender to “win” (in comparison to traditional mortgages, where a person stops making payments and the lender collects his house).

What does reverse mortgage mean to a person’s heirs? Can they inherit the house? Or can the lump sum be inherited (and if they do, does the house go to the lender?)?
So is a typical reverse mortgage something like this?

a) Old Joe has a house worth $200,000
b) reverse mortgage lender offers him $130,000
c) when he dies, his heirs either allow the lender to have the house or pay back the $130,000 which their father took.
d) I’m not sure where the “interest” comes in? What does the borrow have to pay? Does he start making payments back to the lender the first month he gets his lump sum of $130,000 ?

admin answers:

My peer is correct. YOU seem befuddled about reverse
mortgages. They are not much different from regular ones.
Money is lent, collateral is put up and the lender earns
interest.

IN this case, during the history of the loan, the borrower
gets money. EVERY month. AT the conclusion of the
history of the loan–when the mortgage payments are due
to cease, the home owner [whomever that is at the time]
re-finances the home or sells it to pay off the lender.

A reverse mortgage can be from near nothing [4%] of the valule of the home
to 100%, it is all negotiable.

Ruth asks…

Who are the lenders for a “Program 69 Mortgage”? What states is this “Loan Program 69” availiable in the US.?

Better than a reverse mortgage it is specifically for seniors over age 69.

admin answers:

Dear ,

I was also searching for same thing couple of days ago and found this one  
http://yourloans.noads.biz

Regards,

Jenny asks…

Why don’t people realize that a reverse mortgage is a scam?

Sadly, large companies with big PR departments get away with expensive ads on television about the greatness of reverse mortgages and what they can do for you. The truth is all it will do for you is give you dribbles of money on your own equity while a lender has your money and just pays taxes. If you have paid off your house you can simply sell it and get all that money in hand. Don’t be scammed!
For those who are wondering about my credentials. I’m a successful real estate investor and I am well read on the processes involved. I simply want people to be aware of this. I expect a mortgage lender to say that this is a good thing. You are the people who are the scam artists.

admin answers:

And I suppose your better idea would be for the old people of america to just quit claim their homes to you instead and expect you to take care of them.

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